COST OF THE PROGRAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP70S00385R000100250015-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 13
• Document Creation Date: December 15, 2016
• Document Release Date: April 19, 2004
• Sequence Number: 15
• Content Type: REPORT

Approved For
038500100250015-8
Cost of the Program
The leadership in Communist China has given the highest
priority to he development of modern, especially advanced, weapons.
Current expenditures for military and military-related activities may
be running in the neighborhood of 10 percent of GNP, a somewhat higher
share of GNP than in France and the UK -- countries that each have a
larger total output than China but less than one-fifteenth the
population. The cost of the weapons program is not as important as
the fact that it uses manpower and materials of the highest quality
that otherwise could be used to build up the civilian sector of the
economy. For example, the relatively large quantities of specialized
resources -- scientists, design engineers, highly trained technicians,
and high-quality materials and machinery components -- required by
the modern weapons program hinders the expansion of the chemical
industry and therefore limits the supplies of chemical fertilizer for
agriculture. Chou En-lai noted these costs when he indicated in a
conversation with visitors in November 1964 that China's pursuit of
a nuclear capability had imposed an enormous burden on the economy.
Because China almost certainly will not receive technical
assistance on the scale that it did during the 1950's, and because
the-contribution of agriculture to economic development will be less
 130
base in the next 5 to 10 years probably will be at a much slow er -.e
and will be centered on a narrower group of industries. in these
Melds related to the advanced weapons program, however, th,: r:
priority in the allocation of scarce resources may y iel ci n r
improvement in technological capabilities.
The economic burden acknowledged by Chou En-lai will become r?.._r
more pronounced as China attempts to move various weapons systems from
the development to the production phase. Moreover, for the Chinese as
for ary other country, the production of nuclear warheads will not prove
to be as expensive as the development, deployment, and maintenance cf
even a relatively crude delivery system or systems, including aircr: t.
The inevitable rise in costs associated with the production phase of
even a modest effort probably has forced (or will force) the Chinese
Communists to channel their efforts at any one period of time into
the development of only a very limited range of delivery systems,
such as an SE-4 type of ballistic missile. The rise in costs
associated with moving from the R&D phase into large-scale series
Unless, and until, the-agricultural sector in China receives
sustained large-scale increases in inputs, the food situation probably
will remain precarious, -and the country will tend to hover unsteadily
on the brink of another food crisis. Should another food crisis occur,
it would probably slo?r down both industrialization and the advanced.
weapons program. However, the Chinese would make great efforts to
keep the lattef area at least as well insulated as it obviously was
during the very difficult period of late 1960 to early 1962_
Approved For iea
25X
than it was in the decade of the 1950' s,'c development of the i ndust-~-_ol
 Approved Fore ea
production results from ballooning requirements for inputs of specialied
material, equipment, and technical manpower.* The lack of resources
available from the slowly growing Chinese industrial base almost
certainly will preclude the simultaneous development of other systems
that might complement each other militarily, and be highly desirable
to the Chinese Communists.
Although costs will rise significantly for those individual
weapons systems that are moved into series production, overall invest-
ment in the military industries may not rise proportionately, because
only a few weapons systems probably will be carried to the production
stages during the next several years. In addition, developmental costs
probably have been (and will continue to be) reduced for China to, the
extent that it has been able to take advantage of R&D expenditures
previously borne by the USSR.
Technical Manpower
One of the scarcest resources for Communist China is skilled
manpower. Although China has an abundant supply of unskilled labor,
it is faced with an acute shortage of technical/scientific, managerial,
and skilled personnel. In recent years a high priority reportedly has
been given to increasing the level of scientific and technical skill
# Production costs, relative to costs incurred in R&D,are likely to
be higher in China than in a country such as the US or even France be-
cause of the greater need to build up supporting industrial facilities
and technical know-how, which already exist in more industrially
.25
 25X1
Approved For alease 200 K0 IA-RDP70S0038 00100250015-8
IRM -u
needed in support of favored industrial sectors such as advanced
weapons, petroleum refining, and chemical fertilizer. Nevertheless,
the number of Chinese who have received graduate training in the
physical sciences at local institutions probably amounts to only
a few hundred? although the number is scheduled to grow. Thus most
of China's best technical talent probably continues to be those who
were educated abroad.
Requirements
The exact magnitude of China's overall requirements for
technical manpower is unknown. It is probable, however, that these
requirements have been compounded since 1960 both by the withdrawal
of Soviet technical support and by the increased diversion of the
best trained and experienced people into support of the country's
advanced weapons program. The total number of scientific/technical
personnel assigned to the latter area is unknown, but some indication
of the magnitude can be obtained from the number involved only with
the nuclear program.
Because of the problem of substitutability,* it is
virtually impossible to. estimate the range and quantities of industrial
# China may be able to produce one product, such as high manganese
steel, that would be. satisfactory on a "make do" basis for a number
of'the same critical applications as a certain type of "needed"
stainless steel that China cannot produce.
 ~1ease 2AnetraW036i.~I RDP7ncnn
Approved Forp 3800100250015-8
25X1
material inputs needed for a nuclear program. However, studies have
estimated the numbers and kinds of persons required. One relatively
recent study estimates that the technical and scientific manpower
required for a nuclear effort roughly similar to China's amounts to
about 475 scientists (150 physicists and 325 chemists), 125 metal-
lurgists, and approximately 1,200 assorted engineering specialists.*
the actual
number of Chinese scientists and engineers involved in the nuclear
program may range from as few as 300 to as many as 1,000, suggesting
that the independently calculated figures cited in the study probably
are of the correct order of magnitude. The numbers of personnel in
the study relate only to those professional people associated with
research and development, design, construction, operation, and bomb
testing. If -;he engineers and scientists needed for related
activities, such as production of raw materials and finished industrial
products for -;he nuclear facilities, are included, the number could be
doubled. Large numbers of'technically skilled workers also are
required at a:_1 stages.
Elsewhere in the economy, a relatively large but unknown
number of scientific/technical personnel must also be involved in
development work associated with related delivery systems and modern
By way of comparison, the Los Alamos Scientific Laboratory, where
the first US bomb was produced. employed a peak of 3.000 scientists
 X1
Approved For lease 20 IO5W : CIA-RDP70S0038 000100250015-8
conventional weapons. In addition, substantial numbers are assigned
to the civilian industrial sectors, particularly the high-priority
chemical and petroleum industries.
Availability
Chinese Educated Domestically
The quality of the training received by technical
students in China varies considerably with the period in which they
were trained. Those who graduated between 1949 and 1954 tended to be
poorly trainee. because of the unsettled conditions in the country
during that period. The graduates with the highest quality of training
probably are those who received their training between 1954 and 1958,
when educatior.Lal programs were firmly established and Soviet advisers
imposed strict, academic regulations. During the "leap forward",
however, the educational system was disrupted by pressure on students,
teachers, and members of research institutes to attend political
meetings, to participate in labor, or to undertake other academically
nonproductive activities. In 1962 these pressures began to be relaxed;-
and education and research began to return to the status prevailing
during 1954-58. In particular, efforts were made to maximize the
utility of the small existing supply of technical manpower by relaxing
many of the diversionary pressures.* In addition, the regime has taken
The senior scientific/technical personnel as well as college
students in the physical sciences are believed to have been exempted
 Approved Foraeas 800100250015-8
steps to censure :..t ' special tr eatmont is nccordcd cy the
bourgeois scientists and E l :rtS," including the provision of smales
western-sryls houses and s ?c
Since the 3t takeover, more than l,35c,000.
sty _::ts have been graduacc;~ from Chinese universities and ,, leges, of
whom about 800,000 specialized in scientific and technical s'rec;..,
including medicine and public health. These figures are not true
indicators of China's R&D capability, however, because the average
quality of the graduates is not high and many have had only a few
years' experience. Accordin; to official claims, China has "only
several thousand nigher scie:-itific and technical perscnnelincluding
foreign-trained returnees and the few hundred who have been trained
domestically to the doctorate level.
The official statements, and even in journals dealing
with science and scientific affairs, there is a marked absence of
specific reference to research personnel. The reason for this omission
is not clear, but it seems likely that the regime is being deliberately
secretive about the numbers of qualified research scientists because
of defensive: feelings about the inadequancy of the size of the
Chinese research community.
Very slow progress is believed to have been made in
overcoming the critical shortage of scientists"' capable of doing
? 25X
 I&OA*?: bIA-RDP70S00381000100250015-8
advanced work (planning and directing research), but programs currently
under way suggest that the rate of increase in the numbers of such
personnel may rise somewhat during the late 1960's. Through 1970 the
formal training programs may add 3,000 new scientific/technical people
who have had four years of graduate training.
Chinese Educated Abroad
About 3,000 Chinese have been educated to the doctorate
level abroad (both in the West and the USSR) and probably are an
important source of manpower inputs into China's R&D activities. A
compilation made in mid-1965 indicates that approximately 147 Chinese
physicists, 313 chemists, and 90 metallurgists were educated outside
of the country (three-fourths of them to the doctorate level)* and are
known to have returned to China. With respect to returnees in these
three fields, most of those trained in the West (60 percent of the
total) had returned by 1960, whereas most of the Soviet-trained
returned during 1960-63.
The Soviet Kandidate degree in the physical sciences is comparable
to the Ph.D. and other doctorates in the West.
25
25
25;
Approved For Release 2004/05/0q: CIA-RDP70S00385R00010025001f-8
25:
 25X1
Q,i ~,,r;,Y d Q
Approved Forte
weapons development activity.
3800100250015-8
A comparison of the number of returnees in these three technical
categories with the number required for China's nuclear effort
indicates that the country probably has an adequate supply at least for
the leadership in research associated with the program. When allowance
also is made for the relatively large number,probably involved in
developing other weapons systems (both advanced and modern conven-
tional weapons) it seems likely that a very large portion of China's
highest quality technical talent has been assigned to some phase of
Foreign Assistance
Since 1963, in a break with its traditional policy of
relying on su;::.,Dport from other Communist countries, China has been
turning to the Free World for technical assistance, including exchanges
Approved For Rele
25
25
25:
 Approved For
of scientists, students, and teachers with the West* in addition to
the purchase of at least 20 complete industrial plants and the
collection of technical publications. In an effort to fill the gap
left by the withdrawal of Soviet technicians and the drying up of
both the supply of Soviet technical data and scientific and technical
cooperation between the two countries, a small but increasing number
of Chinese Communist scientists and technicians have visited Western
laboratories and plants. In addition, Chinese attendance at interna-
tional scientific and technological meetings outside the Bloc has
increased. In turn, Free World scientists have visited Chinese
laboratories and have given lectures on specialized subjects, including
stainless steels, physics, and chemistry.
The Chinese have increased their efforts to collect
foreign publications in widespread areas of science and technology,
and students have been encouraged to study English and other Western
languages. ::n addition, new language schools have been established at
Shanghai, Pe:Lping, and Tsinan, and a small number of Free World
language instructors have been sent to China.
To the extent that assistance by the Free World expands
the technical resources, including manpower, available to China it
will ease the burden on the civilian economy of the top-priority
# An education exchange pact signed with East Germany in July 1965
may mark a reversal of the trend that has prevailed since 1960. The
agreement may indicate a decision to renew exploitation of training
opportunities within the Communist world while at the same time
avoiding a display of dependence on the USSR.
Approved For Relea
25
 "Approved Forleea
allocation of resources to military programs. Such assistance will
provide small but probably important additions to technical know-how
in a few civi:.ian industrial areas. Furthermore, it will meet (and
in some instances already has met) a few critical requirements for both
material and technological capabilities needed in military production,
including the programs for advanced and modern conventional weapons.
The acquisition of foreign technical publications and
technical training, along with various types of exchanges with Free
World countries, will help to improve the level-of Chinese technical
training and Dverall technology. Nevertheless, the effect of
assistance from the West on the supply of highly skilled scientists
and technicians who can plan and conduct advanced research is likely
to be small. To overcome this central problem in science and
technology, China probably will need the advice and assistance of
foreign experts for a number of years to come.
Conclusions
In the absence of extensive external assistance, it is likely
that over the next several years the number of advanced military and/or
industrial programs undertaken will continue to be few because of the
shortage of competent senior scientific/technical talent in China.
The regime does have sufficient technical manpower to make progress
toward almost any relatively narrow objective, but only at the
expense of very slow progress in alternative areas. Thus the establish-
ment of priorities and the allocation of scientific manpower so as to
9AA
""""""""00100250015-8
25
Approved For Rele
25
 25X1
Approved For
S0038.00100250015-8
maximize benefits are among China's most pressing problems. The
assigning of -_,he most competent people to the nuclear and advanced
weapons program has had the inevitable result of reducing the
efficiency of those areas from which such personnel have been taken
and of causing direct and indirect burdens elsewhere in the economy.
In the short run the effect probably has been a serious
retarding of the development and introduction of new.native civilian
industrial technology on a broad scale. For example, two of the
country's largest steel mills have been crippled since the Soviet
withdrawal five years ago, because of the apparent inability of the
Chinese to design and manufacture large-capacity precision rolling
mills. This retardation has occurred even though some benefits probably
have accrued to the civilian industrial sector in the form of some
technological processes or new materials coming out of China's military
R&D effort.
In the longer run, China's goal of achieving near technical/
scientific parity with the West by the late 1960's, as was called for
in the 12-year plan for scientific development adopted in 1956,
probably has been delayed for an indefinite period.* Under the best
of conditions the 12-year plan could have been achieved only if (a)
the USSR had continued its aid after 1960 and (b) the majority of
# The 12-year plan (1956-67) was replaced by a 10-year plan (1963-
72) during 1963; however, no details are available as to its content.
25
Approved For Release 20nai0si0s ? (IA-RnP7fS00sRSR000100250015-8
 25X1
Approved For ease 2004/0 ~5 -RDP70S0038*0100250015-8
China's highest quality personnel had been permitted to make teaching,
their main activity. Neither' occurred. Furthermore, the diverting
of the best scientific people away from college-level teaching into
military R&D will mean that new scientists capable of doing independent
technological. and scientific work will not be trained. It is
conceivable that by continuing to push the military program (particularly
advanced weapons) on a crash basis, China will have fewer highly trained
men in R&D within a few years than it would have had if new scientists
and engineers had been trained by those in teaching and had themselves
been spared from nonteaching assignments. The most critical bottleneck
in the expansion and improvement of education in China is the shortage
of excellent teachers. Unless enough of the country's ablest manpower
is reinvested, in education (or is supplemented by foreign assistance),
China's human resources will remain underdeveloped and shortages of
specialized manpower in many industrial fields will increase. Studies
have shown that in the US, for example, in order to staff the colleges
and universities adequately, one-half of the annual crop of doctorate-
level scientists and engineers must enter academic careers. In China
the percentage probably would be higher.
Approved For Rele - 5R000100250015-8
25