INTELLIGENCE DEFICIENCIES REVEALED IN SE-27

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80R01731R002600030001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 16, 2016
• Document Release Date: July 22, 2004
• Sequence Number: 1
• Publication Date: August 13, 1952
• Content Type: MF

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MEMORANDUM FOR: SPECIAL ASSISTANT, INTELLIGENCE, DEPARTMENT
OF STATE
ASSISTANT CHIEF OF STAFF, G-2, DEPARTMENT
OF THE ARMY
DIRECTOR OF NAVAL INTELLIGENCE, DEPARTMENT
OF THE NAVY
DIRECTOR OF INTELLIGENCE, HEADQUARTERS, UNITED
STATES AIR FORCE
DIRECTOR OF INTELLIGENCE, ATOMIC ENERGY
COMMISSION
DEPUTY DIRECTOR FOR INTELLIGENCE, THE JOINT STAFF
ASSISTANT TO THE DIRECTOR, FEDERAL BUREAU OF
INVESTIGATION
SUBJECT: Intelligence Deficiencies Revealed in SE-27
1. The Office of National Estimates has reviewed with the
IAC representatives the intelligence deficiencies in SE-27. These
have been presented in Enclosure A.
2. Inasmuch as the intelligence deficiencies are primarily in
regard to economic matters, I have requested Mr. Amory, as the Chair-
man of the Economic Intelligence Committee (EIC), to take up with that
Committee as an urgent matter
a. The review of existing guidance in this field to collection
agencies;
b. Action required'to fill the specific gaps as pointed out
on page four of the enclosure relating to seaborne exports from the
Communist bloc to Communist China and railroad transporation;
c. Consideration of what additional research facilities
within the community should be provided in order to strengthen
our research in this field.
3. I am requesting Mr. Amory to make available to me and to the
other IAC members a progress report within six weeks.
STATE, USAF reviews completed
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4. The statement of intelligence deficiencies points out needs
for coordinating, translating, indexing, and distributing the material
already available on Communist China. I have requested Mr. Reber,
the Assistant Director for Intelligence Coordination to look into
this question with the IAC agencies and similarily to submit a report
to me and the IAC within six weeks. In connection with this Mr. Reber
will keep in close touch with Mr. Amory and will seek the advice of the
EIC Subcommittee on Requirements.
WALTER B. SMITH
Director
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pi?.l".ATEIMIT' CW MBMIMIU Di 'IG'I1a1M n ' i s A'i ' ,:
ACTION t??TZu RPIE:T TO cot um m a, in
1. The first and most basic defieieracry Is In ear
policy with respect to C nisst C ina must lean heavily on
analyses of'mdV aspects of the econorai.c situation within that
court,. Such probleim an the extent to which Western trade
controls have weakened the Chinese Coflrurdst eoono r and the
degree to which additional controls could be rated to weaken
it further, the economic ability of Chat, CUna to carry on
the war in Korea and to ,upport additional Urge-scale military
operations, the degree to which Ckrnwist China can compensate the
UESP for Soviet military and economic assssistancce, the de to nt
of the Chinese Car auni.sst wo potential., and the Inflationary
pressures exci.s?t;ing In Caxavai.rst China., are key quosstiono in the
preparations of National Estimates and the formulation of national
policy with respect to zunisst China. 5E-27 as won as predecessor
estimates true hampered by the difficulties in determining the extent
and manner in which economic factors affected the intentions and
capabilities of the 1biping regine. The absence of such treatnent
reflected gape in both.coollection and research efforts, thus:
Clegt9M. Thu* is a serious lash of reliably
economic informti on Ccrm ist Chimes.. The
followi points are pertinent$
(l) man when the mainland was under the
Nationalists and the US had considerable
freedom to obtain inforwtio+n, eoone c
information was gvnerally inadequate
and/ oar unreliable
(2) The data qualitative Infoii tion that
were available with respect to the eeoo:n
of the Chinese =Inland at the time the
Nationalists evacuated has been getting
rapidly out of date. US officials were
recalled in Der 390 and business
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slow
represeentativoe progresaive3y withda eV
after that date. Maftwaticna Haar
able limited occasional
Commmint peri , Cam, p ,
and speeches made by C_irmmiet officials.
(3) As in the case of all CCr t .et states, much
information on the Chinese economy Is regarded
as a state secret and In strictly guarded,.
etc . There U need for coordinatix g, trans.
sating, indexing, and dietributiZ g the material
already available on Curt China. In psrtioular,
it is impost to coordinate the various efforts to
obtain and exploit material on the ec oncnV of China
(sash as the M . Forces fieaoaaroh a3'eat at Stanford
,
/I the State ? p=tmentte collection and tr ation
projects rat .RO Fo rr and Tai i, and CIA's Foreign
DocuMnt ivisions). Because
of the datM or ono, it is Ortioulariy
important to mho dupZi cation in this field,
S. The economic reaoarah facilities ano-
catA Co imist China in the t ash r ton inrte11i-
geWe ooaarau-7ity have boon itaadequate.. Alth
there are a sufficient amber of specialists (e. .,
mining, transportation,, agricultural speoialieta)
who could be transferred from prea,~nt areas of
responsibility to work on Communist China, there
are few analysts crith good general econ lc back-
ground and an area knowledge of China. Thus,
economic redo reh facilities are inadequate to
make full use of even the limited amount of economic
information readily available on C ai et China.
Q3,j, which is the principal contributor to National
F& i atce dealing with the economy of Ommunist
China, has ouy named In this activity.
1k reove r, with crease emphasis on rececroh and
and yseis of the Chinese Coammmiat ems, mare
information,, direct or derived, would be made
available. (Th the roughly analogous situation
with respect to the Soviet eco , considerable
progress has been made in exploiting through Intensive
analytical techniques the limited information available.)
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f $peeifi. lly, a rooent eur conducted by
the t` ar .o TntaIII9WYM C ittee reveals
t only the equivalent of appra aately"professional ar1Lxlyste* it the u S Govern-
mnt (including approxj&ate]y Iin non-VIG
aevwiae) are era ,mpd wort which can
posoib?fy contribute to thq l:uction of
xt? tianal Lastiz ates doaling with the sow
of Cza.iat GUM. Of there an yatt ,
there are the egi4valont of only en , 3 in
the prep ration of auaal"ma on the . use
Cii.et IoW as a whole; the reminder emo
emplqyed -on the rasech of tcif'ic Bents
of the oe*ly* a. g, , international trade W d
fi ionae, tranal=tation, xtoa inl.a, and indLufty.
Stwe National rstinatee arc largely devoted to
the .rii.nat i o n of broad problema, It is apparent
that the paucity of anf lyottas who have integrated
approach to the ooonmr of China as a wllolo hao
direct-17 and seriously affoct6d the quality of
i.ntelli enoe entiT.atee dealing with this aspect of
Cwt CI d=. It should be f xrthor noted
that n those tanaiysts uhc:se IfOrlb is a .a as
to bear on the production of National Entia"aten
probably devote a large promotion of their tt-16
purely deport asntal problen's.
(2) T re are the ecru valent of as ro tely
a ?y-sts wigaged in ooonc iie research u i
contributes only ix~:tl or ve otely to
the National ~" t ; t al a in the
IM program cmd
There in attached as "Aff a table wmn-nrIzIM
the LTC finding%.
In view of the fact that there ore fessional anall?yr
the Govexe t who spend only a fractional part, of their
tins In research on specialized aapoeta of the Chinese
C rr ais t econau j the ru r of professionals worl ; on
this area have been a aaesl. In one- -ful.1 tine eaquivolents.
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2. In addition, t in Intelligence to
t In the PVGPwat on of estimate a well ow in the
Preparation of ouch other eats .tars ea Sin and t -32t
Inteili err c seaborne .3c orts from the
Ommm bloc to COMMIOt Chia is iffier
quate. I'1ithout such data it is diffiocult,
if Impossible, to r.+ ive at a r?+elabla
estimate of the effect of a tleste-kVooed
wval bloak on C Se+t Qasna.
. Theme osontSr z e to be a Oerims m in ifor-
mation with respect to the capaoit? and traffic
of the Tr - Iberian ftilr am men as with
respect to the oxrmpetSng reps for txa-
-portatian over this route. Ob usl r the lack
of such intelii ace: a eeente a for ridable
obstacle not only with respect to the p eparat a
of estimates that are pr cnari econc nio in natures,
but also with respect to those dca 4 with Chinese
Cow=lst and Soviet unitary niter In the
P= East. Cmt estSmates on. he capacity of the
road ore admittedly xrobob y subject to a 50
percent aror in. sit OV Ai tion, .. It has been
sugeetsd that additional 9 afors t an the Trans---
R . be *"fri,.e
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IA representatives mugpm at these
sourms be expUred as a specific collection posaS.? 25X1
bility. The rep" sentativoa beUmm that it r, be
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possible to obtain a r obi; app sad. of exi
evidence than has yet boon ju-AU .
Additional i rsi.s is nec rss in the capacity and
traffic of alternate. crerlmd routes fry the Soviet
Par rhA to ILhnchuria.
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h3U ~1 ! S 'E'THIC H CIA OFFIC-'','S HAVE TAKEN OR ...:'JILL `J'Ai E TO C OJ'_ C'1 _'IlE
IN1 TLLIG TICE DEFIC SNCIES REVEALED IN SE-27
1. Tile CIA offices have reported the following actions to improve
intelligence coverage in Communist China, par.ticualrly with respect to
economics:
a. The Office of '_T'rainil is planning to establish a course
designed to develop competence in the reading of Chinese ies:uspapers.
It is also talking the initiative to discuss with production offices
in the Agency additional Chinese language training program; as
they may require.
e. The Foreign Documents Division is issuing economic reports,
resulting from exploitation, at the rate of about ten per month.
The source materials consist of 32 Communist Chinese newspapers and
a substantial volume of periodicals, monographs, pamphlets,
and other documents irregularly received.
analysts are currently assigned to exploitation for
information. The T/O requested for next year would add
positions.
The L`iC agencies are being requested to submit new comprehensive
requirements which will define the existing intelligence gaps.
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h. ORR is shown in SE-27 post-mortem as having only the
equivalent offull-time analysts at work on the economy
of China. The T/0 submitted by AD/RR calls for FI analysts
to work exclusively on this area as follows:
Because of the functional organization of RR the foregoing only
gives a partial picture. The new research program for 1953 now
being drafted will focus attention on all important sectors of
the Chinese economy and bring to bear the talents of industrial
and technical specialists to an extent equivalent to another
hfull-time analysts' time.
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