THE ROLE OF TRANSPORT IN THE ECONOMY OF COMMUNIST CHINA 1950-55
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INTELLIGENCE MEMORANDUM
THE ROLE OF TRANSPORT IN THE ECONOMY
OF COMMUNIST CHINA
1950-55
CIA/RR IM-419
1 February 1956
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 791i, THE TRANSMISSION OR REVELATION OF
WHICH IN ANY MANNER TO AN UNAUTHORIZED PERSON IS
PROHIBITED BY LAW.
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
153
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FQREWQRD
The progress of Communist China's attempts-to industrialize the
economy rapidly is to a great extent dependent on the capabilities of
its transport system, which affects many of the basic production sec-
tors of the economy. Concerted efforts have been made to modernize
transport services inherited by the Communists in 1949. This memo-
randum is an attempt to determine the progress of these efforts and
to assess the performance and adequacy of the Chinese transport
system as a whole and by its individual components. The memorandum
also devotes considerable attention to Chinese efforts to expand trans-
port capability to meet increasing economic requirements, and in do-
ing so it emphasizes the growing importance of the railroads in the
basic reorientation of China's economy.
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CONTENTS
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
I. Transport Facilities . . . . . . . . . . . . . . . . . . . . . . 2
A. Internal . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1. Rail . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Inland Water . . . . . . . . . . . . . . . . . . . . . . 3
3. Highway . . . . . . . . . 4
4. Air . . . . . . . . . . . . . . . . 5
B. Coastal Shipping . . . . .. . . . . . . . . . . . . . . . . 6
II. Progress in Restoring and Developing the Transport Sector Of the
Economy . . . . . . . . . . . . . . . . . . . . . . .. . .
A. Factors Affecting the Rate of Growth . . . . . . . . . . . .
1. Demand: Pattern of the Use of Facilities . . . . . . . . 7
a. Internal . . . . . . . . . . . . . . . . . . . . 8
1) Rail 8
2) Inland Water 9
(3) Highway . . . . . . . . . . . . . . . . . . . 9
(4) Air . . . . . . . . . . . . . . . . . . . . . . . 10
b. Coastal Shipping . .. . . . . . . . . . . . . . . . 10
2. Investment . . . . . . . . . . . . . . . . . . .. . . . . 11
a. Internal . . . . . . . . . . . . . . . . . . . . . 11
(1) Rail . . . . . . . . . . . . . . . . . . . . 11
2) Inland Water . . . . . . . . . . . . . . . . . . 13
3) Highway . . . . . . . . . . . . . . . . . . . . . 14
4) Air . . . . . . . . . . . . . . . . . . . . . . . 14+
b. Coastal Shipping . . . . . . . . . . . . . . . . 15
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=S . Operating Efficiency . . . . . . . ?
15
16
.
a. Internal . . . . . . . . . . . . . .
(1) Rail . . . . . . . . . . . . . . . . . . . . . .
(2) Inland Water . . . . . . . . . . ? . . . ? , .
3) Highway . . . . . . . . . ? . . . . . . . . .
(4) Air . . . . . . . . . . . . .
b. CoE,stal Shipping . . . . . . . . . .
16
16
17
17
18
III. Adequacy of the Transport System . . . . . . I . . .
A. Internal . . . . ? ? ? . ? . ' . . ' .
I . . . 20
1. Rail . . . . . . . . . . . . . . . . 21
2. Inland Water . . . . . . . . . 21
3. Highway . . . . . . . . . . . . . . . . . . . . . 22
4. Air . . . . . . . . . . . . . .
B. Coastal Shipping . . . . . ? ? ' ? . ' . . ' . ' . . . .
Appendixes
Appendix A. Gaps in Intelligence . . ? ? ? . . '
Appendix B. Source References . . . . . . . . .
1. Production of Basic Sectors of the Economy 6f Communist.China, 8
1953-54 . . . . . . . . . . . .
2. Transport Performance of Communist China, 150-60 .
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Map
Communist China: Railroads and Selected Roads, June
1955 ............................
Page
Inside Back
Cover
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CIA /RR IM- 419 S-E-C -R--E -T
(ORR Project 43.1009)
1950-55
Summary
The transport sector of the economy of Communist China. appears to
be responding to the demands of the increasing requirements of expand-
ing economic activity. The transport system of China was not used to
capacity by the Chinese Nationalists, but the Communists have pushed
its capacity to the limit. In order to expand the system further,
notably in the railroad and highway sectors, there has been intensive
exploitation of personnel and equipment. As a result, significant rates
of growth in each sector of transport have been attained.
This is particularly true of the overburdened railroads, the only
medium of transport whose progress will significantly affect Communist
China's attempts to increase its economic potential through accelerated
industrialization. Conscious that increased railroad capability is
essential to plans for increased industrialization, the Chinese are
exerting considerable effort to strengthen the railroad system. Al-
though this effort requires extensive allocations of resources which
in large measure must be generated by the Chinese economy, it would
be dangerous to assume that railroad shortcomings will be permitted
to impair industrial growth. The power of the regime to allocate la-
bor and capital resources on a priority basis points to the contrary.
Moreover, considering the close working relationship between Peiping
and Moscow, it seems unlikely that the USSR would fail to provide for
any Chinese deficiencies in resources required for railroad expansion.
Future developments in the field of transport, especially in the
railroad sector, should provide excellent criteria for judging the
strength and adequacy of the Chinese Communist economy.
* The estimates and conclusions contained in this memorandum repre-
sent the best judgment of ORR as of 8 November 1955.
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I
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I. Transport Facilities.
Internal t:-ansport routes in Communist C ina are concentrated
in the eastern half of the country, converging p imarily on such large,
populous economic renters as Mukden (Shen-yang), Peiping, Shanghai,
Hankow (Hang-k'ow), and Canton (Kuang-chou). Th industrial region
in the northeast, in particular, is well served y internal transport
routes. Construction of new transport routes in,o western areas
served largely by primitive means of transport i~ being increasingly
emphasized, however, in an attempt to develop u 'exploited resources
and to increase the effectiveness of central government control.
Since 1953 the Chinese Communists have 4ttempted to increase
the freight-carrying capacity of their transport system. Heav'Ler load-
ing of freight cars and increased efficiency initheir use have accom-
panied a steady growth in the car park. Nevertieless, present traffic
'Levels are taxing freight car utilization to th limit, and a consider-
able expansion seems mandatory if projectec traffic levels are to be
attained. Despite an extensive waterway fleet, whose over-all capacity
has not been fully utilized since 1950, the Chi ese Communists are
adding new vessels annually. An effort is being made to replace
less efficient Junks, the traditional mainstayIof river operations,
by more modern craft, many of which are powere by diesel engines.
To meet increased traffic requirements, the hi hway vehicle park al-
so has grown steadily since 1950, chiefly beca se of large imports
from the Soviet '31oc. When domestic manufactu4e of motor vehicles
commences in 1957, increasing the rate of grow h of the. truck park,
there will be less dependence on such imports. The lack of modern
civil air transport services in Communist Chin is emphasized by its
limited aircraft inventory, which consist; of oviet planes and some
US planes acquired from the Chinese Nationalists by abandonment or de-
- 11
Singe the end of 1949, when they ad only 21,700 kilo-
meters of operable railroad track, the Chines Communists have allo-
cated a large part of available resources to he expansion of the
system and to strengthening existing faci.liti s and have made con-
siderable progress.* By the end of 1954, 21,90 kilometers of track
* See the map showing the railroads of C ommufist China, inside back cover.
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were operable, and 1,000 kilometers of new lines are to be constructed
in 1955. New track construction has been emphasized in the western
provinces and in strategic supply lines provided to the southeastern
coast, but the rail system remains most dense in the northeast and
east-central parts of the country, where economic development is great-
est. Continued efforts to reach undeveloped areas and to increase the
logistic capability of the railroads should. increase significantly the
total operable track by 1960. 1/*
An analysis of the relationship between traffic and oper-
ational data indicates that the Chinese required about 68,000 freight
cars in 1954, an increase of about 22 percent over the estimated num-
ber for 1952. A recent announcement indicates that rolling stock pro-
duction as well as inventory may be even higher than these requirements
suggest. 2/ The annual rate of expansion, however, does not seem to
have been adequate, as is suggested by the progressive decline in that
portion of the park believed to be held in reserve during 1952-54. It
is probable, therefore, that shortages of rolling stock restrict current
operational capacity to some extent. The limited inventory probably
would be a crucial factor in the event of an emergency, especially be-
cause many units have passed the normal retirement age.
2. Inland Water.
The inland waterway system of Communist China is one of
the most extensive in the world. Some 95,000 kilometers of inland
waterway routes are now open to navigation, although most are suit-
able only for shallow draft vessels. 3/ With the exception of the
Hsi River system in the provinces of Kwantung (Kwang-tung), Kwangsi
(Kuang-si), and Hunan (Hu-nan), the river system is concentrated
largely north of the Yangtze (Ch'an Chiang) River and east of Chungking
(Ch'ung-ch'ing). The Yangtze River, traditionally the main artery of water-
borne commerce, has retained its relative significance despite considerable
reductions in traffic. Of seven rivers in the northeast, only the
Sungari (Sung-hua Chiang), an artery for domestic traffic and Sino-
Soviet trade, is of any importance. Though few of the significant
waterways lie south of the Yangtze, in some sections of this region
rivers provide the principal means of transport. Despite recent con-
struction efforts, the traditional waterway routes in China have not
been significantly augmented and probably will not be in the near future.
Extensive plans for river improvement, however, probably will make
many of the neglected routes more useful as supplementary routes to over-
burdened rail lines.
* For serially numbered source references, see Appendix B.
-3-
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Similarly, little change in the rive' fleet has occurred
since the Chinese Communists came to power. Alttough there is insuf-
ficient intelligence on the Chinese Communist waterway inventory,
there is general agreement on two important facts: (a) the self-
propelled fleet remains small, both actually andiirelatively, and (b) the
non-self-propelled fleet consists mainly of many, small junks, which
have an impressive aggregate cargo capacity. e junk fleet, estimated
at approximately 370,000 units of 10 metric ton * capacity each, is
concentrated largsly on the Yangtze and its tri utaries, which cover
the area of greatest demand for its services. he self-propelled fleet,
probably similarly concentrated, is estimated t total only about 750
steamers, tugs, and passenger launches. 4/ The growing dependence of
these vessels on petroleum fuels 5/ emphasizes trend that has continued
despite measures taken by the West to reduce the availability of petroleum
to China. Moreover, the construction of new vessels and plants for fleet
expansion emphasize diesel engines, with few references to steam pro-
puls ion.
3. Highway.
The Chinese Communists have made c
the constr. ction of new highways. The road ne
78,000 kilometers in 1950 to 140,000 kilomete
mainly by extending new highways into areas s
and animal tran3port. 6/ At present, the gre
net is not capanle of supporting truck traffi
It is fairly well dispersed, however, except
densest in northeast and central-south China.
roads into bord.er areas and into mining and i
petted to brim; the total length of highway i
meters by 1960. Low standards of constructi
to keep the efficiency of Chinese highway tr
Transport in tie mountainous areas is.especi
season, when earth-surfaced roads deteriorat
n, however, will continue
nsport at a low level.
lly poor during the rainy
rapidly. Limited bridge
capacities, many ferry crossings, and vulner~bility to flooding in some
areas create further limitations to the efficiency of the Chinese road
system. Dependence on inferior materials an~i lack of mechanical equip-
ment will continue to impede the modernization of Chinese highways for
many years.
* Unless oth?rwise indicated, tonnages are/given in metric tons through-
out this memorandum.
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7/ Construction of new
n Inner Mongolia, and is
throughout the year.
rved formerly by coolie
ter part of this road
s by the end of 1954,
work was expanded from
nsiderable progress in
China to 158,000 kilo-
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In their efforts to increase the vehicle park, the Chinese Communists
have had considerable success. It is estimated that, mainly because
of large imports of vehicles from the Soviet Bloc, the motor truck in-
ventory grew from 40,000 units in 1950 to some 67,000 units in 1954. 8/
Continued imports from the Bloc and the domestic manufacture of vehi-
cles, beginning in 1957, are expected to bring the total truck park
to 150,000 units by the end of 1960. 9/
4. Air.
During 1954 the unduplicated basic civil air network of
Communist China comprised approximately 15,700 route-kilometers flown
by two airlines -- the Chinese People's Aviation Corporation (CPAC)
and the Sino-Soviet enterprise, the Soviet-Chinese Joint Stock Company
for Aviation (SKOGA). 10/ With the withdrawal of the USSR from SKOGA
at the end of 1954, the Chinese Communists undertook to operate the en-
tire network. Main flights are scheduled over the eastern part of the
country and radiate principally from Peiping to centers such as Mukden,
Shanghai, and K'un-ming. Connections are made with the Soviet civil
air net across Mongolia to Irkutsk and across Sinkiang to Alma-Ata.
While the civil air network amounts to only one-fifth of the system
extant in 1948, it seems likely to expand in the near future. Pros-
pects exist for extending Chinese air routes to North Vietnam, Burma,
India, and possibly Indonesia. Discussions with Burma and India to
establish reciprocal air services with China are already under way.
The inventory of the Chinese Communist civil air fleet,
composed of various types of craft acquired from diverse sources, is
also well below pre-Communist levels. By the withdrawal of the USSR
from joint ownership in SKOGA, the Chinese obtained the 18 Li-2 (CAB)
aircraft provided by the USSR as its share in the company. These
were added to the existing CPAC fleet, the nucleus of which had been
acquired in 1949 by defections from the Chinese Nationalist airlines
based at Hong Kong. These, in addition to the Nationalist; aircraft
abandoned on the mainland, had given CPAC a fleet of 13 C-47's,
12 C-46's, and 1 Convair 240, all of US manufacture. 11/ With the
subsequent acquisition of additional Li-21s and normal rates of
attrition, the Chinese civil air fleet probably consisted of about
50 2-engine transports in mid-1955, a considerable reduction over
the 92 aircraft, including some 4-engine types, available in 1948.
Some additions from the USSR can be expected in the near future,
however, as the entire Bloc continues to regularize its air opera-
tions.
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B. Coastal Shipping.
Operations of the Chinese Communist ocea
considerably reduced by the removal of many vess
Chinese Nationalists, are confined to serving do
The limited size of the fleet compels the Chines
on foreign-flag tonnage, both Soviet Bloc and no
domestic trade, and for all longer international
1950 and 1954 the Chinese merchant fleet increas
During this period it grew from 79 vessels of 17
tons (GRT) to 111 vessels of 278,000 GRT. 12/ I
being given to the coastal fleet, however, to le
munists" dependence on foreign-flag shipping. B
fleet had grown to 120 vessels of 295,000 GRT an
statements by Li F.z-shun, probably will be augme
the end of 1957. 13/ The Chinese communists are
building a fleet of 350,000 to 400,000 GRT tiy 19
still be less than half the size of the merchant
by the Chinese Nationalists in 1949. Despite im
fleet, which
ls to Formosa by the
estic coastal trade.
Communists to rely
-Bloc, for some
movements. Between
d only moderately.
000 gross register
creasing emphasis is
sen the Chinese Com-
mid-1955 the coastal
according to recent
tea considerably by
believed capable of
0, but this would
tonnage possessed
ressive plans and
a lacks a merchant
recent accomplishments, therefore, Communist. Chi
marine fleet adequate for a world power, anc it
it can appreciably improve its ranking of 2115th
of the world
ill be some years before
ong the merchant fleets
The domestic operations of the Chinese C mmunist merchant fleet
are augmented by a large number of ocean-going junks, which may amount
to about 10,000 vessels with a total carrying capacity of 400,000 to
500,000 tons, 14/ and by foreign-flag shipping. Junks operate mainly
south of the Yangtze estuary, and the large Chin se Communist vessels
engaged in coastal trade are concentrated in the area north of Shanghai
and to a lesser extent in the area from Swatow South, because of
Nationalist patrols in the East China-Formosa Strait area. Soviet
vessels occasionally engage in domestic shipping from Shanghai north,
and a small group of non-Communist ships ply the waters to the south,
despite accompanying hazards, and provide a shut le-type service out
of Hong Kong.
Few of the hundreds of ports and landing;
coast are of major importance to foreign or domes
(Ta-lien), Ta-ku, Tientsin (T'ien-thing), Hsink'+
Shanghai, Swatow (13hen-t'ou), and Canton/Whampoa
discharge a total )f 115,000 tons daily, eompris
along the Chinese
tic traffic. Dairen
ng, Tsingtao (Ch'ing Tao),
(Huang-pu), which can
66 percent of the.
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total cargo-handling capacity of Chinese ports. The minor ports of
Chinwangtao (Ch'in-huang-tao), Ningpo (Yin-hsien), Wenchow (Yung-chia),
Chefoo (Yen-t'ai), Amoy (Hsia-men), Chan-chiang (Fort Bayard), Haihou,
Yulin, and Foochow (Fu-chou) are important terminals for domestic
coastal trade. 15/ Amoy and Foochow, opposite Formosa, are currently
of singular importance as possible staging areas for an offshore is-
land offensive against the Chinese Nationalists.
II. Progress in Restoring and Developing the Transport Sector of the
Economy.
A. Factors Affecting the Rate of Growth.
The growing performance of China's transport system since
the Communist gained control of the government has been the pro-
duct of many factors -- a growing demand -for the service, increased
investments, and improved operating efficiency. Chief among these have
been the increased requirements of the industrialization program.
Considerable investment to rehabilitate facilities and equipment was
necessary to obtain optimum use of the established system. Subsequent
and planned expenditures are directed toward expanding transport capacity
to prevent the system from becoming a bottleneck. The need for maximum
utilization of existing facilities has resulted in intensive efforts
to increase the efficiency of traffic operations, a goal of particular
significance in railroad transport, where the limited equipment avail-
able is being taxed to the utmost.
1. Demand: Pattern of the Use of Facilities.
Production data for basic sectors of the Chinese Communist
economy provide a relatively valid indication of transportation per-
formance. This is especially true of Chinese railroads, whose growth
has consistently paralleled increases in production of basic commodities.
Table 1* shows production in basic sectors of the Chinese economy dur-
ing 1953 and 195+ and indicates the growing requirements for transpor-
tation:
Table 1 follows on p. 8.
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Pr,xluction of Basic Sectors of tY e Economy
of Communist China. 16/
1953-54
i
Million Metric Tons
commodity
19531
1954
oai
70.4
80.0
lonstruction materials
538.
770.5
Food crops
154.
159.0
Timber
14.
17.7
POL (including imports)
Ferrous metals
a. Liternal.
(1) Rail.
1. 1.6
9.(9 12.8
Railroads have borne the manor burden of the expand-
ing Chinese Communist economy, especially i areas of industrial pro-
duction and consumption. Manchuria, which comprises 9 percent of
China's area, has more than half the total rail mileage, and orig-
inates more -,raffic per capita than does a]l the remainder of China.
Manchuria prxluces half the coal,. most of he soya beans, much of
the wheat ani timber, more than half of th, ores and steel, and a
high percentage of manufactured products t at move in commerce. The
Peiping-Tientsin area, and the regions aro nd Tsingtao, ~3hanghai,
Hankow, and Canton are also important, butj the larger part of China
originates little rail traffic. The southeast coast, most of the
middle Yangtze valley, Szechwan (Ssu-eh'u 4n), and the southwest, Kansu,
Tibet, and ,iinkiang are still restricted o local trade between vil-
lages and nearby farms and contribute lit le to rail transport. The
results of efforts to develop these areas Jhave been small. 17/
As is evident, Chinese rai 1 operations consist largely
of the movement of a few bulk commodities from a few places of origin
to a few principal destinations. Orval, tie largest single item shipped,
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comprises about one-third of total tonnage.- Foodstuffs are also a
major traffic commodity, followed by mineral construction material,
wood, and ores. Iron and steel products such as plates, shapes, and
rails are becoming of increasing importance, while petroleum products
are still relatively minor items. 18/
(2) Inland Water.
Inland water transport in Communist China carries
bulk cargoes where speed is not important. It is essentially a local
operation -- the average length of haul was only 370 kilometers in
1954 -- despite the great length of main routes such as the Yangtze
River. 'Traditionally, Chinese waterways have carried much of the
country's traffic in agriculture and building materials, and to a
lesser extent, industrial equipment and consumer goods. The increased
emphasis on rail transport, which has replaced water carriage as the
principal mover of freight, and the extensive loss of foreign coastal
shipping have reduced the relative importance of water transport and
have been accompanied by shifts in the composition of waterway traffic.
Agricultural cargoes, although still of major significance, are becom-
ing relatively less important as industrial traffic increases. Be-
tween 1951 and 1953 the proportion of agricultural cargoes on the Yangtze
River, which comprise about half of waterway freight movement, decreased
from 40 to 30 percent of total traffic. 19/
The trend toward increased use of waterways to con-
vey industrial cargoes may continue, in view of large construction
requirements in areas accessible to river vessels and increased attempts
to reduce the railroads' burden by shifting traffic to rivers wherever
possible. In most cases, however, there is little choice between rail
and water routes, because they do not parallel each other to any signif-
icant extent. Because the traffic demands of Chinese industry impose
a north-south axis on freight movement, the east-west orientation of
Chinese rivers probably will limit their potential importance.
(3) Highway.
Motor transport in Communist China is chiefly em-
ployed for short-distance intercity freight movement. In the north
and central sections of the country, where the road network is fairly
dense, although in poor condition, it acts mainly as a feeder to rail-
roads and rivers, whereas in Manchuria the main roads paralleled rail
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lines and are therefore complementary. In sIme areas, notably the
mountainous so-.itheast, southwest, and west, roads provide the only
means of commixiication. 20/
Motor transport has encoi.raged the growth of com-
mercial centers in rural areas not served dii4ectly by rail or water-
way. New feeder roads which join many sc:!atQred farming communities
to the transport network have facilitated the marketing of commodities
previously dependent on animal and coolie caijriers. The extension of
new roads into remote border regions has assisted the economic and
cultural development of racial minority districts and tied them more
closely to the central government.
(1) Air.
Air transport in Communist China plays a very
limited role it current freight movement., butlit is important in
the movement of high-value, low-tonnage c:argo!and for high-priority
personnel transportation. The lack of modern! aircraft probably will
hamper the modernization of civil air transport for some time, al-
though he prospective introduction of Soviet Il-14 (CRATE) planes
on a small scale will improve operations to s~me extent.
b. Coastal Shipping.
Interdiction of coastal shipping activity by the
Chinese Nationalists is effective to a limite extent and only in the
Formosa Strait area. In the Yellow Sea and t e Pohai Gulf, the Chinese
Communists have developed trunk and feeder pasenger and freight routes
to service all 3oastal ports north of Wenchow; Coal and foodstuffs in
transit between Shanghai and ports in North China probably constitute
the bulk of traffic. In the South the Chines have established routes
radiating from Canton and serving the Kwangtu g coast and Hainan.
The limited capacity of the C inese Communist merchant
fleet; tonnage has compelled their reliance on;foreign-flag vessels for
some domestic coastal movements. The performance of this small but
active group of vessels cannot be determined accurately. Western-flag
ships are used primarily to augment Chinese Communist junk operations
south of Shanghai, where Nationalist patrols prevent the use of larger
Chinese vessels. A few Soviet vessels are active intermittently in
coal traffic north of Shanghai.
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The value of Chinese Communist investment in transportation
cannot be determined, but, judging by the extent of the rehabilitation
and expansion programs, it has been considerable. The announced Five
Year Plan (1953-57) investment in transportation and communications
construction is 8.21 billion yuan, or about 20 percent of the total
investment of new capital. 21/ The transport system inherited. by the
Communists, weakened by years of war, had to be rehabilitated, and, in
the case of the railroads, greatly expanded, to implement Chinese C om-
mu tst plans to industrialize the economy rapidly. Considerable effort
has been directed toward restoring and expanding highway transport and,
to a lesser extent, water, but the danger of hostilities along the China
coast and the reorientation of China's foreign trade, as well as its
economy, has compelled major emphasis to be on strengthening railroads.
Although considerable progress in railroad development has been made
since 1949, and railroad performance has increased in accordance with
economic requirements, the strain of supporting a growing economy was
apparent in 1954, in increased shortages of freight cars and locomo-
tives and a reduced rate of growth. It seems likely, therefore, that
a program of additional capital investment, designed to increase route
capacity and the availability of equipment, is necessary. to improve
railroad performance. Chinese investment plans recognize these short-
comings and show an intention to prevent them from becoming a brake on
industrialization.
a. Internal.
(1) Rail.
A large part of the investment resources available
to Communist China since 1949 have been allocated to the expansion of
the rail system and to improving its existing facilities. During the
First Five Year Plan, 5.671 billion yuan, or about 70 percent of total
investment of new capital in transport and communications, are to be
allocated for rail transport. Of this, 2.365 million yuan are earmarked
for new rail construction. 22/ By the end of 1954, 3,000 kilometers
of new operable track were constructed and 1,000 kilometers of new line
are to be laid in 1955. A major part of the new construction is con-
centrated in the western provinces of China. The extension of the rail
system into less accessible regions is designed mainly to exploit un-
developed economic resources and to provide more effective political
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20 percent of total railroad investment planned for 1955 is to be devoted
to the manufacture of rolling stock and motive power. This large alloca-
tion indicates that a progressively tightening freight-car and locomotive
shortage exists and that the Chinese Communists intend to prevent it from
slowing down economic growth.
(2) Inland Water.
The Communist regime has developed an impressive
program for the rehabilitation and improvement of its inland water-
ways which will benefit other sections of the economy as well as
transport. It is estimated that the First Five Year Plan includes
an allocation of 800 million Yuan for capital investment in water
transport, but the allocation to inland waterway construction cannot
be separated. 28/ Appropriations for waterway construction in 1954
however, were 7E percent higher than in the previous year and reportedly
will increase by 35 percent in 1955. 29/ In contrast to the years imme-
diately after 1950, when the reconstruction of ports and harbors received
primary attention, the main emphasis now seems to be placed on the
improvement of long-neglected facilities and routes. Water conserva-
tion and flood control projects are major targets which w:Lll.be.of
most benefit to agriculture but to some extent will overcome also
seasonal restrictions on navigation in some areas.
Relatively little investment was devoted to addi-
tions to inventory before 1954, as most of the investment was for the
purchase of second-hand craft or for salvage work. Since 1954, how-
ever, more emphasis has been placed on new construction. Following
the launching in September 1954 of the Min-chang, the first passenger
steamer built under the Communist regime, the construction of numerous
small launches, tugs, and freighters has been reported.
The Yangtze River is receiving particular attention.
Appropriations for construction projects in 1953 were 4 times the amount
for 1952, 30/ and planned investment during 1955 was scheduled to in-
crease 70 percent over the 1954 level. 31/ Major efforts are being
directed toward channel improvement, as evidenced by the opening in
January 1955 of night navigation in the upper Yangtze, between I'chang
and Chungking.
The central government, in an effort to reduce its
financial burden, has decreed that local authorities must finance in-
land water transport improvements. This directive, issued in November 1953
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by Chou En-lai, ~:;2/ does not seem to have brougt the desired results,
however, for locs,l officials are still relying 'on the central admin-
istration for recuired funds.
(3) Highway.
The Chinese Communists haves'placed considerable
emphasis on road rehabilitation and on new construction, which is
accomplished primarily by manual labor because only limited mechanical
equipment is available. Since 1950 highways ha"e doubled in length.
The first Plan allocates an estimate of 900 mil~lion yuan for highway
construction, or about 10 percent of the total Investment-of new capital
in transport and communications. Major emphasi has been placed on
the extension of the highway network to border egions where only primi-
tive means of communication formerly existed. he Sikang-Tibet, Tsinghai-
Tibet, and Kunming - Ta-lo roads are examples o this trend. The road
to Ta-:Lo on the Burmese border may prove particularly significant if,
as is believed possible, it facilitates Chineseleconomic penetration
of Burma. The thorough reconditioning and expaision of the Fukien
network, means of logistic support for an offensive in the Fo:rmosa
area, also has strategic as well as economic sinificance. 33/
Continued efforts to mcdern.ze Chinese highway
-transport seem probable. The 1955 plan provideI for the survey and
construction of 23 new roads, mainly in ind.ustr~al and mining areas
or leading into national minority regions. 34/ ;Construction is to
be completed on the Lhasa-Gyangtze-Shigatse ro in the Tibet Auton-
omous Region and its branch leading south throu h Phari Dzong into
India. Work will also continue on the Sikang-T bet and Tsingliai-
Tibet roads, whica require constant maintenance Ito be fully usable.
These and other projects will add 4,500 kil.omet+rs to the highway
network of Communist China during 1955. 35/ An indication of the
investment in. inventory can be obtained from the plan to produce 4,000
vehicles in 1957. 36/
) Air.
During the First Five Year plan, 101 million yuan
are to be invested in civil aviation. The end se of this allocation
cannot be determiied, but some investment is being made in addition
to.inventory of equipment. Equipment received From the USSR following
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its withdrawal from SKOGA is being paid for on a long-term basis.
The requirement for new aircraft which will accompany route expansion
will doubtless be met from the same source and on similar terms.
b. Coastal Shipping.
Investment in the Chinese Communist merchant marine
service, probably limited by the prospect of hostilities in the Formosa
Strait, has apparently been devoted in large part to modernizing the
existing fleet and improving the port facilities. Terminals of impor-
tance to foreign trade have received special attention, as indicated
by construction of a new deep-water port at T'ang-ku in North China.
In 1954, moreover, the government allocated nearly 10 million yuan to
increase port mechanization, 37/ in an attempt to replace primitive
cargo-handling procedures. Efforts to reduce the dependence of Com-
munist China on foreign-flag shipping for overseas and domestic trade
probably will involve added expenditure for new ship purchase and con-
struction, particularly if the Formosa issue is peacefully settled and
regular coastal services can be reestablished.
3. Operating Efficiency.
Attempts to improve transport efficiency are evidenced
with great frequency in Chinese Communist plans. Claims of success
exist in similar profusion, but in many cases there is no reliable
basis for judging their validity or their relationship to pre-Communist
operations. In some instances the extensive efforts to make optimum
use of facilities and equipment are indicative of the strain under
which transport facilities are operating. This seems particularly
true of the 'railroad system, whose capacity the Chinese Communists
are most interested in increasing. In inland' waterways and coastal
shipping, claims of great percentage increases in utilization must
be tempered by the. facts that the capability of equipment inherited
by the Communists exceeded traffic demands and that operations were
often extremely inefficient. Increased utilization, therefore, is
not necessarily indicative of increased operating efficiency, al-
though some progress has been made in this direction.
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a. Internal.
(1) Rail .
In their quest for increased traffic capacity, the
Chinese Communists have emphasized maximum uti1Lzation of available
rolling stock. Particular emphasis has been placed on decreasing turn-
around time and increasing loads per car, which individually affect
operating efficiency and, combined, determine m .ximum freight-car
requirements at given traffic levels. Success ~s apparent in both these
;areas. Between 1950 and 1953, turnaround time
4.0 days, where it has apparently leveled off.
was reduced from 4.7 to
By 1954 the average load
.3 tons over the average
per car had reached 31.6 tons, an increase of 3
of 1950. The significance of this achievement
realized that the increase in the average Carlo
in 1954 over 1953 was equivalent to loading; an
itional tons in 24 hours. 38/
s apparent when it is
d of coal by 1.3 tons
verage of 6,500 add-
Reductions in turnaround tine are not likely to
continue. New lines extended into remote areas will tend to offset
gains elsewhere, especially if economic ac-,ivit is thereby stimulated
to any great extent. Load per car, on the othe hand, should continue
to increase, chiefly because the introduction o freight cars of larger
capacity will tend to raise the average load.
(2) Inland Water.
Chinese Communist statements claim sharp rises in
the operating efficiency of the river flees. In addition to increased
efficiency in performance, there is reported coisolidation and reorgani-
zation in management to permit closer control a operations. Voyage
time has been rec.uced in some instances by as ch as one-half. The
efficiency of tugs has been improved by the su stitution of the push-
ing method for the traditional. towing of barges, with a resultant in-
crease in speed E,.nd decrease in fuel consumptioi. 39/
Labor productivity also is improving, although
shortages of trained personnel persist. Efforts are being made to.
reduce administrEtive duplication and to organize traffic operations
more efficiently. Remarkable improvement is claimed in some areas in
cargo-handling efficiency. 40/ Primarily, this has been the result of
increased substitution of mechanical equipment for manual operations
rather than of training which, despite much publicized help from the
'USSR, remains quite limited. 4411/
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In addition to increasing the efficiency of water
carriers, the Chinese Communists have directed some effort to making
the cost of river transport more attractive to shippers. Substantial
reductions in freight rates during the first 3 years of Communist con-
trol apparently indicate An intention to reestablish the prewar com-
petitive status of inland water transport. 42/ Continued efforts to
increase operating efficiency in the coming years seem likely. More-
over, considerable inefficiency in the operations of the diverse water
transport system inherited by the Communists not only makes past accom-
plishments appear impressive but assures a certain degree of success
in the future.
(3) Highway.
The efficient utilization of highway transport in
Communist China is hampered to a large extent by physical restrictions,
such as low-capacity bridges, numerous ferries, and inadequate road
construction and maintenance. Lack of adequately trained personnel
has also been a problem. Although the technological innovations nec-
essary to overcome physical limitations have not been forthcoming to
an appreciable degree, 43/ considerable effort has been directed to-
ward reducing inefficient hauling. Provincial transport companies
were established under central control of Peiping, and a rigid system
of traffic control was introduced to allocate trucking properly. 44/
Administrative reorganization, coupled with the introduction of
heavier loading vehicles, undoubtedly resulted in some improvement,
but commodity distribution is such that trucks are still required
to operate empty more than half the time.
The need for more technically trained personnel
was realized by the Chinese Communists as early as 1952, 45/ but the
building of adequate training facilities. is still, for the most part,
in the planning phase. Technical advice provided in many cases by
the USSR, however, overcomes this deficiency to some extent.
(4+) Air.
Operating efficiency of civil air transport in
Communist China is believed to have suffered by the conflict in ideol-
ogies between the US-trained managerial group that defected from the
Nationalists and the Peiping organization, which has been strongly
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influenced by the USSR. Political reliabiliir,y apparently has been
placed before technical training as a requirement of responsibility,
a Communist tendency that in many cases compounds inefficiency. 46/
b. Coastal Shipping.
Comparative analysis of growth indexes for the merchant
marine inventory of Communist China and its performance shows that
great strides have been made in increasing the utilization of the
coastal fleet, Much of the progress was un4oubtedly due to the grow-
ing demand fo:: shipping services, with whic4 the fleet was more than
adequate to cope. 47/ Some slack in fleet operations may in fact
still exist. Nevertheless, the Chinese coninue to emphasize effi-
ciency as a primary goal and claim some suc~esses in the attainment.
Efforts have been directed toward a more ef'icient use of labor by
the mechanization of cargo handling at ocean terminals and closer
supervision of traffic operations. 48/ The; constant fulfillment of
performance plans, in some cases by substantial margins, indicates
progress in this direction, since targets are apparently integrated
with plans for increasing efficiency. I
III. Adequacy of the Transport System. J
Since the Communists gained control of/mainland China in 1949,
transport service as a factor of demand has shown marked increases
in performance, paralleling to a great extent the growth of the
industrial sector of the economy. By 19541, total traffic in terms
of tons originated was more than double 19,50 performance. (See
Table 2*.) In some cases the magnitude of annual increases has been
due to the depressed levels of production?of the economy in 1949 and
the accompanying underutilization of tran port capacity. In any event,
gains in transport performance have been impressive, particularly in
the railroad sector, which by 1953 had egi.aled in tons originated the
previous peak year of 1945 under the Japanese. Inland water traffic,
although increasing at a rate greater tha' railroad tons originated,
by 1954 had, reached a level of only somewhat less than half previous
peak performance. By 1960 this defir_iencfr is expected to be overcome.,
but with the growing dependence on railroads, river transport is
likely never to regain its relative position among China's freight
carriers.
Table 2 follows on p. 19.
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Highway transport remains of little significance in terms of total
transport performance. It is, however, significant in the :Long-haul
movement of goo.is in the western provinces, a is-indicated by the
growing volume of traffic carried annually. Civil air transport has
not yet attainei previous levels of performan e. The probable addi-
tion of new air routes to adjacent countries f Southeast Asia and
prospective acquisition of better performing oviet aircraft, how-
ever, are expected to facilitate progress in the future. Despite
the disruption of regular coastal services which followed the Com-
munist acquisition of control over China; Chinese merchant marine
performance has grown considerably, although is yet the fleet remains
well below pre-Communist levels. The basic reorientation of China's
foreign trade toward the Soviet Bloc, accompanied by an increased
use of railroac.s for such traffic and the disruption of regular ser-
vices in the Formosa Strait, is likely to im ede the growth. of
Chinese coastal. shipping. l
A A. Interne4l.
1. Ra.l .
Since the Communists gained control aver mainland China
in 1949, the railroads have evidenced progressive gains in perform-
ance, consistent with the requirements of a growing aconomy. By
1953, freight -,raffic more than tripled the performance in 1949,
when traffic was at a low of 48.2 million tons originated because
of economic and political disorganization following the civil war.
As of 1954, when tons originated reached. 183 0 million, however,
there were indLcations that the railroads were operating under an
increasing strain, which might soon become ute for both the
economic and military sectors of China. 76/
Although the magnitude of annual increases in terms of
tonnage increments has been growing, the pro ortionate growth dur-
ing recent years has become smaller. Tons originated have fallen
from a 20-percent increase in 1953 over 1952 to a planned 13.6-per-
cent increase in 1955 over 1954. Coupled wi h increasing evidence
of equipment shortages, this suggests that tie Chinese Communists
apparently have reached a definite turn:_ng pint in the develop-
ment of railroad transport. Palliative measires to increase capacity
through a series of administrative reforms and workes
campaigns are believed to have reached their effective limits. Further
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appreciable progress by the railroads can be accomplished only through
a program of additional capital investment, designed to increase both
physical route capacity and the availability of rolling stock and
motive power. 77/
Plans indicate a cognizance of these requirements. Whether
or not the Chinese Communists have the resources available to implement
the extensive investment program evisioned, however, remains to be seen.
Moreover, the effect of the reported cut of $270 million in planned
expenditures for railroad expansion 78/ cannot be determined, but it
seems not to have affected the extensive construction program now under
way. Notwithstanding possible shortcomings, however, it is probable
that, should the USSR so desire, all current problems facing the
Chinese railroads could be overcome through the import of necessary
material and equipment from the Soviet Bloc.
2. Inland Water.
In 1954 the performance of inland water transport in Com-
munist China in terms of ton-kilometers was almost four times greater
than in 1950, whereas tons originated during these years grew at a
somewhat greater rate because of a progressively decreasing average
length of haul. Despite such steady improvement since the Communists
assumed control of China, however, river traffic has not yet approached
prewar levels. Continued emphasis on this medium of transport, and
the consequent gains envisioned, should bring performance close to
prewar levels by 1960, when it is estimated that some 48 million tons
of cargo will be originated. Nevertheless, with the increasingly
important role of the railroads, it is considered that inland water
transport will never again be as important to China in terms of per-
centage of total traffic as it was in the 1930's.
3. Highway.
In 1954 the performance of highway transport in Communist
China was almost seven times greater than in 1950. The extent of
progress in road transport is indicated by the fact that its share
of total tons originated by all carriers in China has grown from
about 6 percent in 1950 to over 16 percent in 1954. Performance pro-
bably would have been much greater and the apparent burden on vehicles
much less but for a traffic pattern that permits the use of freight
space for only half the average haul. Nevertheless, excess ton-kilometer
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capacity exi.sts, and constant efforts to ij icrease truck utilization,
coupled with the growing demand for motor transport services in es-
tablished economic areas as well as in newly developed regions, is
expected to bring performance by 1960 to level three times that
of 1954-
4. Air.
trnever regained its for-
Civil air transport in il air
4
mer positio=a, nor has it approached its p ak performance attained
in 1948. By 1954, only one-fifth of the ength of the :1948 network
was being flown and the number of aircraf available had been re-
duced from 92, including 4-engine types, ~o between 35 and 40, all
2-engine planes. Nevertheless, some progress from the 'Low level
of performance of 1949 is apparent in the; increase in traffic be-
tween 1950 and 1954. Moreover, performance through 1960, which
will be influenced by the relinquishment of Soviet stockholdings
in SKOGA, is expected to increase steadily. The regularization of
civil air operations throughout the Sino-Ooviet Bloc is expected
to lead to the Chinese acquisition of new Soviet aircraft, pro-
bably the better performing 11-14 (CRATE), which the Poles and Czech-
oslovaks have obtained to fly routes shared with Aeroflot, the
Soviet air carrier. 79/
B. Coastal Shipping.
Despite the irregularities and d
trade of Communist China, traffic carrie
ing 1954 r?=presented an eightfold increa
of merchant shipping since 1949, however
several factors connected with the Commu
extensive loss of merchant shipping tonn
eruptions in the coastal
in Chinese vessels lur-
e over 1950. The growth
has been hampered by
ist rise to power. The
ge to the Nationalists
and the radical shift in international trade routes from sea to
rail through Manchuria, which accompanie4 the reorientation of
China's fcreign trade toward the Soviet Bloc, were particularly
responsible for reducing the demand for hipping. Bota river and
coastal traffic suffered. The results probably are most noticeable
in the sizable reduction in cargo handle at Shanghai, formerly
China's mast important river and coastal port.
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Additions to the coastal fleet, coupled with continuing
efforts to increase its utilization, are expected to raise perform-
ance by 1960 to about 50 percent above the 1954 level. Planned
traffic levels differ considerably with estimated prospective per-
formance, but they are apparently based on unrealistic expectations
of fleet increases, and, in any case, they are not supported by past
rates of growth.
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APPENDIX A
GAPS IN INTELLIGENCE
A. Rail.
In spite of the fact that significant progress has been made
during the past 2 years toward filling gaps in intelligence on Chinese
Communist railroad activity, many of the estimates contained in this
memorandum are not based on series of data. This often allows for
varied interpretations of information at hand. More specifically,
this dearth of information is particularly crucial as concerns rail-
road traffic in terms of tons originated, the rolling stock inven-
tory, and the construction of new lines.
1. Railroad Traffic.
Very little information is available concerning the com-
modity composition of Chinese Communist freight traffic. Because of
significant changes in the pattern of traffic movements in China
under the Communist regime and because of a lack of a complete ser-
ies of pre-1949 reports, the general statements which have been made
by the Communists during the 1950-55 period add little which would
permit an accurate appraisal of commodity movements, particularly
of traffic in coal, agricultural products, and sand and gravel. In
the case of coal, more information is needed concerning major pro-
ducing mines whose production is consumed locally. Information
concerning traffic in agricultural products and in sand and gravel
is wholly inadequate to permit anything more than a general apprecia-
tion of the magnitude of such traffic.
Chinese Communist figures of railroad traffic continue
to pose a problem of interpretation. Tenuous as information from
Communist sources sometimes appears, it is often more significant
than was probably intended, especially when it can be related to
pre-1949 data and to reports of on-the-spot observers.
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2. Fre::,ght Car Park.
Current estimates of the Chinese Communist freight car
park are founded primarily on the number of cars which would be re-
quired to move announced traffic levels. Altlough these estimates
are believed to be reasonable, they do not contain the degree of
certitude needed for this vital statistic. A more solid position
in reference to tons per car and turnaround tome would significantly
improve the intelligence community's knowledg4 of both the operation
and the capacitj of the Chinese Communist rolling stock inventory.
In addition, cu:~'rent data concerning retireme t rates, reserve factors,
repair rates, rolling stock production, and e uipment imports suffer
from the apparent Communist effort to withhol information concern-
ing these important factors.
3. New Line Construction. '
In the field of construction acti1ity, the Chinese C om-
munists have, oa the whole, been able to wit cold information con-
cerning the construction of new lines. Lackig current information
concerning the construction of new lines, thejintelligence community's
interpretation of Chinese Communist capabilit.es, vulnerabilities,
and intentions, through study of rail transport must remain somewhat
tentative.
B. Water .
Major PapM exist in the following fields:
1. Inventory.
Available intelligence affords little detail on the num-
ber, type, tonrjage, and other aspects of the inland water fleet.
Intelligence ae to geographic distribution of the inland fleet is
also poor. Ocean fleet data are conside:?ably better; the main gap
is in intelligence on the fleet under 1,000 GBBT. oit tle is available
on inventory or distribution of that large group
2. Traffic.
Except for very general data and fragmentary data on
various regionfw (insufficient to enable construction of over-all
traffic figurei3), intelligence on traffic pe formance is poor. There
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is little appreciable difference in the poor quality of inland and
ocean traffic. Inland traffic data are, however, somewhat better.
Intelligence on ocean ports served by Western-flag vessels
is adequate to good, and other port intelligence is poor to nonexistent.
Little or nothing is available on such major ports as Hankow, Chungking,
or Harbin to allow up-to-date appraisal of capacities and operations.
4. Administration.
Much is lacking on administrative and operational aspects
of water transport. Although there is some useful intelligence on
organization, it is generally out of date. On the other hand, there
is virtually nothing on the administrative functioning of the water
transport system or on its interrelationship with other agencies.
5. Budget.
Lack of budget data is serious. Without such data the
position which water transport occupies in state planning cannot be
determined. Budget information is usually in the broadest possible
terms or is combined with other nonrelated items. For example, trans-
port and water conservancy are often combined, or water transport and
postal budgets are combined.
6. Rate and Cost.
Virtually no intelligence is available on rates or costs
in water transport. This gap creates a serious barrier to the ap-
praisal both of the utility of water transport and of its competitive
position in the transport economy.
C. Highway.
Several important gaps exist in intelligence on highway trans-
port in Communist China. Sufficient data on the vehicle inventory are
not available. Estimates are limited in value, since they can only
be given in terms of total numbers of trucks, buses, automobiles, and
the like, and cannot be made validly by type, organization, and carry-
ing capacity. Intelligence on the operation of the truck park is also
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very limited. Essential operational factorsl such as time spent in
operation, tine in repair, and average lengtt{h of haul are given
occasionally. They are restricted generally, however, to certain
areas of operation and often conflict with One another.
The most useful statistic for computing traffic estimates
is the percentage distribution of traffic m ving in state-operated
vehicles as cpposed to that moving in private vehicles. Informa-
tion of this type is not presently availabl . Traffic statistics
are often given for state-operated Class 1 arriers, but these data
are incomplete and do not permit an accurate evaluation of total
traffic. A regional knowledge of the transport services performed
by state vehicles as opposed to those perf rmed by private vehicles
is also essential to a thorough analysis o the traffic pattern.
Such information is presently not availabl4. Information on the
extent of use of military vehicles in supp?rt of civilian traffic
is also needed. Certain assumptions can be made from available
data, but they are often misleading when applied to the country as
a whole.
Intelligence on motor transport re air facilities is very
spar3e as regards their actual number, distribution, and. adequacy.
Such information is of major importance i estimating the use and
availabilit;j of motor vehicles. Moreover the lack of data regard-
ing investments in motor transport and ro.d construction is another
major gap in intelligence. Actual invest ent figures are rarely
announced, so that any analysis of the ge eral level of expenditures
must be given necessarily in terms of new construction data and known
increments to the vehicle park.
From the present level of intelligence received on the
above subjects, it seems unlikely that aty of these gaps can be
filled in the near future.
Rather serious gaps remain in information on civil aviation
in Communist China. Satisfactory data o the personnel complement
of the airline are not available. The d ficiency is particularly
serious in regard to the distribution of airline personnel: that
is, the number of pilots and other airline personnel and the number
of qualif-.ed employees available for maintenance, communications,
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and administrative functions. In addition, little is known about the
training of airline personnel. Available information gives no firm
indication of the total number trained since 1950, of the number trained
in each category, or of the standards and general effectiveness of the
training program.
Information is not available in sufficient detail concerning
the organization of the Civil Aviation Bureau in Peiping.
Another major deficiency is the lack of statistical informa-
tion concerning the cargo shipped by air and concerning the part played
by Chinese Communist air transport in East-West trade.
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S-E-C-R-E-T
APPENDIX B
SOURCE REFERENCES
Evaluations, following the classification entry and designated
"Eval.," have the following significance:
Doc. - Documentary
A - Completely reliable
B - Usually reliable
C - Fairly reliable
D - Not usually reliable
E - Not reliable
F - Cannot be judged
1
- Confirmed by other
sources
2
- Probably true
3
- Possibly true
4
- Doubtful
5
- Probably false
6
- Cannot be judged
"Documentary" refers to original documents of foreign governments
and organizations; copies or translations of such documents by a staff
officer; or information extracted from such documents by a staff offi-
cer, all of which may carry the field evaluation "Documentary."
Evaluations not otherwise designated are those appearing on. the
cited document; those designated "RR" are by the author of this report.
No "RR" evaluation is given when the author agrees with the evaluation
on the cited document.
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