JOINT ECONOMIC COMMITTEE RELEASES STUDY ON ECONOMY OF MAINLAND CHINA - REPORT OF A COMMITTEE - SUPPLEMENTAL VIEWS (S, REPT. NO. 348)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP69B00369R000200110002-0
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 15, 2016
• Document Release Date: March 31, 2004
• Sequence Number: 2
• Publication Date: June 19, 1967
• Content Type: OPEN

Approved CONGREase LO4 a -RDWpAGM69R000200110002-0 S 8423
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relating to the Rural Electrification Admin- Fifth. Her growing economy can allow example in 1926 when 20 million people
istration; to the Committee on Agriculture for -major nuclear weapon development. died, with the 1959 61 famine, we find there
has been some malnutrition but no authen-
tic Forestry. Sixth. It is not likely she will increase tic reports of starvation.
A resolution adopted by the Greenwich her military posture in North Vietnam However, there is no doubt that agricul-
Grange, Greenwich, _Ohio, remonstrating because of a fear of a United States- ture, which accounts for 81 percent of
against the proposed Lake Erie-Ohio River Sino confrontation in a conventional China's economic activity, has been and con-
Canal; to the Committee on Pyplie Works. war. tinues to be the weak spot in her economy.
rths of her She has only 7.8 percent of the world's cul-
f
(~
ou
Seventh. Since three-
the
JOINT ECONOMIC COMMI E- foreign trade is with our allies, the tivated world's laand ndu to feed Her nearly 25 peercent of frustration
he
LEASES STUDY ON ECON MY OF American embargo on nonstrategic trade is her "brown thumb," for almost everywhere
MAINLAND CHINA-REPORT OF with China has had little economic effect Communists have managed either to reduce
A COMMITTEE - SUPPLEMENTAL upon China since alternative trade with agricultural production or at least to keep
VIEWS (S. REPT. NO. 348) our allies has been available. it from growing as it might reasonably have
Mr. PROXMIRE. Mr. President, the Eighth. As long as there is U.S. mili- been expected. In spite of the tolerable food
performance of a nation's economy, it tary presence in Vietnam, the political situation, agricultural failures have affected
can be argued, is ultimately the decisive justification for our present trade em- the far ceconomy, Inability to
determinant in shaping its political posy . of industrial machinery.
ture in the world. nomic realities I ask unanimous consent that a sum- The Committee was told that the Chinese
But important as it is, we have tended have attempted to maintain a level of ap-
mary of the Joint Economic Committee proximately 2,000 calories per day per capita.
to o neglect the main economic candmic China side in in
world poll- report be printed in the RECORD at this Just how well they have met this target is le of the r d y h there s point. one of the points on which the statistical
tics today: While tan enormous The PRESIDING OFFICER. The re- information is contradictory. Calories are,
thirst for more information about China, port will be received and printed, as re- of course, not the ultimate criteria of nutri-
this interest has been focused largely on quested by the Senator from Wisconsin. tion. Whereas these estimates, relying on a
the political side. common denominator for food sufficiency,
For this reason, the Joint Economic SUMMARY OF JOINT ECONOMIC COMMITTEE'S concentrate on per capita grain supplies,
REPORT ON MAINLAND CHINESE ECONOMY there are said to have been very large gains
Committee, n the suggestion of the Co- GATHERING STATISTICAL DATA in the supplies of eggs, vegetables, fruit,
[Mguished. Sew r Senator
ranking New York Any serious study of the Chinese economy poultry and meat.
p bncan o who is the ttee un undertook must first be footnoted with a word of cau- Chinese economic planners have been con
Republican on the committee, undertook tion about the difficulty in gathering accur- fronted by two alternatives in their drive to
a study of China's involvement as an en- ate data. This is not a problem unique to expand agricultural production: 1) extend
tity in the economic world. China, for we have the same difficulty with the cultivated areas or 2) seek to increase the
I am pleased to announce that I have other "lesser-developed countries." However, yield of the acreage now in use by applica-
today filed with the clerk of the Senate the problem is compounded in China by the tion of modern intensive farm methods.
the committee's report on its study, fact that the Chinese State Statistical Bu- Faced with this dilemma, the government
"Mainland China in the World Econ- reau ceased publishing official data in 1961. has chosen the second alternative, and in
The report grows out of 4 days of In 1961, when she was in economic depres- particular has favored the most productive
puffy."blic hearings in April during sion and the "Great Leap Forward" created and stable areas. This policy may simply be
pu which incredible economic confusion, it was good economics, but it was also suggested as
the committee heard testimony from 10 thought that they. withheld information to a consequence of the growth in provincial
China specialists. The committee's study "save face." However, most witnesses agreed autonomy,
was in two phases. The first phase in- that the policy has been continued regard- In addition to agricultural problems, China
volved the preparation of a two-volume less of the prevailing economic condition. has been plagued by medical and educational
compendium of detailed studies by a There is a problem in measuring popula- problems. However, the Committee was told that
survey of
recent score invites specialists recognized as fl on, translating of per c ptaldaily is perfom ncegin China dare neglecto efer-
specific e i.of the hi- figure
nes ri
sere e economy. That compendium, Cum, en- caloric consumption, (in estimating food Pole to the remarkable gains she has made in
titled "Economic Profile of Mainland production) and calculating agricultural education, medicine, public health and scien-
and industrial output. In spite of these diffi- tific research.
China," was released in March. culties in making satisfying and reliable es- Education and medical
The committee's aim was to throw timates, and granting the frequent discrep- The number of children and young adults
light on the ups and downs of the Chi- ancies in the estimates made by various in full-time educational institutions today
nese economy since the Communist re- China experts, both at home and abroad, it is is 5 to 7 times the school enrollment in 1949.
still fair to conclude that we do know quite The enrollment of over 10 million children
witnesses in secondary schools is 10 times that of the
winecame to discuss power how in agricultural heard and a bit about Communist China.
DOMESTIC ECONOMY 1 million in 1949. College age students num-
on the
on. Statistics
.Industrial resources are allocated in an
mill
ber
about
num onomy omy wavering otio economic the performance osofsthe Chinesereco omy bersain olved inithe educational process do
ec
pragmatism and and revolutionary dogma- has een its unevenness. Leaving aside the not tell us very much, of course, without
nom and to wanc de al Cher to Play period from 1949-52, devoted largely to some evaluation of the quality and sub-
bringing economic law and order to the war- stances of the educational activity. Certain-
a role in international trade e and torn mainland, most experts estimated that ly it stands to reason that an authoritarian
politics. the average growth rate for the period of regime, engaged in a "great cultural revolu-
I would like to highlight some of the 1952-66 was approximately 4-5 percent. Yet tion," must have some strong ideas about ot, "culture."
Scientific and
mwere enOr- arked by non-tidis, or is eolog calneducation may be presented
conclusions reached by the committee's mthe oon. Theo 1952-57 period average
study: ctrnne economic rationality and relatively accurately, but we do know what neither
derstanding or the outline wurlu --u ideological purLUy- -?o .....,.,? --?r - -- w?
viewing herself as threatened by hostile ward" which resulted in economic disaster; China's gain in medical and related public
powers. - by 1962 the regime returned to a more ra- health fields has also been attested by many
Second. Despite uneven economic per- tional approach to economic planning. In re- recent visitors to China. The Committee was
cent months we have seen another possible told that the infant mortality rate has drop-
formance under Communist leadership, swing to stricter orthodoxy. Although official ped until it is now comparable to Canada's
ideological repercussions have given Chinese reports state that the economy has rate C Cholera, small pox, typhoid, typhus have
China a more manageable labor force not been seriously disrupted, it is still too almost been eliminated. A member of the
and economy than that of many of her early to tell. U.S. Public Health Service stated a few years
Asian neighbors. - Agriculture ago that the "prevention and control of
Third. Despite agricultural crises, Agricultural production and per capita many infections which had ravaged China
there were no authentic reports of fain- food consumption statistics are sometimes for generations was a most startling accom-
ine and an ample food situation is conflicting, but combining estimates with plishment." It was also reported that because
eyewitness reports, the image projected over China had been plagued by large and fre-
reported. the last two or three years is one of both quent epidemics, the government had gone
Fourth. Remarkable gains have been amply supply and distribution of food with to great lengths to enlighten the entire popu-
made in education, medicine, public no widespread hunger. When comparing lation on health and sanitation conscious-
health, and scientific research. famines during pre-Communist regimes, for ness through intensive radio propaganda.
Approved For Release 2004/04/08 : CIA-RDP69B00369R000200110002-0
 S 8424 Approved For Rele~, QfW99YM Yfiff0~9DB003SENATE
Ind
t
us
ry ornment may have considerable difficulty in Conti
China has made great strid
c
i
i
i
es
onv
n
mprov-
ncing thhe provincial leaders twat an- men
ing the industrial sector of her economy, other try atrevolution in agriculture is des- able
The Committee was told th
t i
i
a
ndustrial pro- a
rable. However, interference by the Red ann
duction rose on the average by 11 percent Guards and cent
al
government, is clearly and
r
between 1949-65 and by 20 percent in 1966. meeting with local and regional resistance, cline
If the 1966 claim is at all accurate, the in- It is significant! to point out the degree Lei
dustrial production index is at least 350 right cf autonomy the provinces have in deter- Chin
now, a record few improverished
countries raining economic; performance; this has I.
can nd claim. And in order to support industrial brought into question the central regime's bane
a
agricultural gains, Chinese capital in- abilit
'
y
tier, several witnesses cautioned against ducti(
tilizers and textiles has amounted to 20-25 concluding that alt political interferertee and beans
percent of her GNP. an unusuall
v.i
y
g
reased
d
...c
Ideological teachin , working through a, more 2.
Investment in electrical
power has enabled equal distribution of income, the abs :nce of ain).
China to modernize industries by -fl-j-
u rease in agricultural production-
in imports from the West should de-
axlfly in .967.
u`s r.nw look briefly at the structure of
s trade-with whom she trades:
ap.rr... Sine-Japanese trade is based on
t of nputs for Japanese industrial pro-
n--icon ore, pig iron, coal and soy-
4 rade between the two has increased
r(` than 35% in the first six months
extern Eu:ope. (including Great Brit-
Z__- yrivnegea class and a strong em- as it as with Js,pan; however, the statistics
them with more electric-driven machinery phasis on moral i
centives have tended to are still' quite significant. In 1964, 1965 and
The nuclear energy program is a good ex- i C
Chi
n
g
ve
na a mor manageable Iabo: force the first ]calf of 1966, China's exports to
ample. The Chinese Communist newspapers and more managea le economy than ,hat of Western E.irope increased by approximately
also have frequently disclosed that In the some of its Asian neighbors. 30 Pe ce,rtt annually, but China's imports of
steel industry more and more electric con-
verters are being used to produce quality FaRi:IGIQ TRADE plants in-
steel and alloys. Foreign trade ha ficant role creased oven mori rapidly. In order to finance
played a signi the a proxi mates i* $50 million import surplus
Another example is the rapidly expanding jr China's economic growth, as a highway in tra e; with Western Europe and the large
chemical fertilizer industry, In which syn- fcr the transmittal of new technologp, new scale mm imports from Canada, Australia
thetic ammonia is produced by the elec- goods, and new methods of production, and A ge:atina, China has earned sterling in
trolysis method. It was estimated that Chi- During the early 1950's, the pattern of trade with Hong Kong, Malaysia and Singa-
nese production combined with Japanese tin- China's trade closely resembled that o:' most pore.
ports of chemical fertilizers has enabled the other underdeveloped countries, Coml.,sting 3. '4i; Kong, Malaysia and Singapore.
central government to supply the agricul- mainly of the export of domestic agricultural It is by exporting to these three countries
tural sector with 3 times the 1957 amount of and mineral products, supplemented by some that h$na has been able to build up Its
chemical fertilizers. finished textiles. These were, in tuexi, ex- sterlin reserve, 'ehich in 1965, reached al-
The textile industry was the largest branch changed for machinery and specific types of most OQ nctllion.
in the whole industrial sector during the raw materials, un vailable at home, and Chi a has earned an excellent credit rat-
1960's and perhaps still Is now. Increased required for proces?ing by domestic Indus- ing du in,; the last 17 years and many firms
investment in textiles, particularly cotton, trial plants. China' principal trading part- in the ion-Communist countries desire to
has enabled the Chinese to export to Malay- ner in the early 1 50's was determined by Increase heir exports, including complete
sia, Singapore and Hong Kong. ideology preferen
' th
ce
e U.S.S.R. who ac- Indust 1 )ants,. to China on long-term
As one witness put it, China is a "muscle- co anted for over ` credit. C
% of China's external
t ira has not yet sought long-term
bound giant", with unleashed potential. She rr,de. Imports of
machinery from the U.S S R. credit Ui. ahoulc. be able to obtain it, if
is one of the four top producers in the world ran as high as $500-600 million per year. and w e>(i fl is desired. For if her needs for
of coal, iron ore, mercury, tin, tungsten, During the presenlt decade, the pattern of extensive! modernization in such areas as
magnetite, salt and antimony. She is self- China's trade has changed dramat:.cally, metals rg;r, chemical production, machine-
sufficient in oil, as a result of discoveries at This is attributable to two main factors: builds g,! aad transportation continue at
the Tach-ing oil field ad
hh
s
ne as offered to the collapse of the 'Great Leap ForvuarcP' in their Melt rata, the Chinese market for
export oil to Japan; her coal resources are 1958-60, and the Sino-Soviet split in 1966. produc ion equipment and technical know-
good for at least a century. She has also, by how fr Iz# the Wait will continue to expand.
made progress in warding off natural disas- Dislocations caused b the "Great Leap
ters in irrigation, flood control and water Forward" reduced th~e dometsic food supply, The opeful outcome of this situation may
conservation. so that Industrial g1 ods Imports were coin- be the ails of a ~ossible change in political
pressed sharply whiffle food imports, Conti- attitud s;ofthe Chinese leaders toward the
Ideological effects on industry and
agriculture
Ideological shifts have been among the
most significant variables in both industrial
and agricultural performance in China. They
have affected industrial management in four
main ways:
1. The question of who makes the decision
in a factory: the "Reds-.versus-experts" di-
lemma.
2. The method for motivating workers:
morals stimuli versus material Incentives,
such as piece rate systems, bonuses and
significant pay scale differentials.
3. The method for eliminating class dis-
tinctions: forcing management personnel to
spend one or two days per week In physical
labor and promoting the worker to partici-
pation in management decisions.
4. The amount of time spent on the job
in political education and ideological in-
doctrination.
Agriculture has also been affected by ideo-
logical shifts. At first, agricultural nroduc-
creased. However, ride, vegetables, processed Chines gcve rnmeiit's attitude toward a for-
foods and meat products continued to be ex- eign co tine is based on Ideology and not
ported to balance the grain import costs. trade caauner