THE STATUS OF SCIENCE AND TECHNOLOGY IN CHINA'S MODERNIZATION EFFORT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83B00551R000200150005-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 38
• Document Creation Date: December 20, 2016
• Document Release Date: August 8, 2007
• Sequence Number: 5
• Publication Date: August 1, 1981
• Content Type: REPORT

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Foreign
Assessment
Center
The Status of
Science and Technology in
China's Modernization Effort
Secret
SW 81-10080
August 1981
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National
Foreign
Assessment
Center
The Status of
Science and Technology in
China's Modernization Effort
Information available as of 20 July 1981
has been used in the preparation of this report.
OSWR
queries are welcome and may be directed to the
Chief, China Science and Technology Branch,
Officer for East Asia.
This paper has been coordinated with the Offices of
Economic Research, Geographic and Societal
Research, and Political Analysis; the Directorate of
Operations; and the Acting National Intelligence
Secret
SW 81-10080
August 1981
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The Status of
Science and Technology in
China's Modernization Effort
plant facilities.
Efforts to use science and technology to serve the needs of China's "four
modernizations" program have been constrained by a shortage of qualified
personnel, ineffective management, and the continued inability to translate
research findings into production results efficiently. Some of these prob-
lems derive from the continued aftereffects of the Cultural Revolution on
Chinese research and educational institutions. Generally, however, most of
the problems are caused by shortcomings within the institutional structure
for formulating and implementing S&T policies. Although substantial
progress has been made in remedying a variety of deficiencies, we believe
that China's attainment of its modernization goals will be substantially
delayed, primarily by limitations in manufacturing technology and modern
control, has resulted in a patchwork pattern of technology.
In the materials and electronics industries, for example, sophisticated
products can be developed within the laboratory or produced on a prototype
basis, but the Chinese have been unable consistently to integrate R&D
advances into serial production. Lack of quality control and industrial
standardization are also major obstacles; erratic standards and inconsistent
quality continue to reduce the compatibility and reliability of communica-
tions equipment and computers. Where large-scale, high-volume produc-
tion is not a main objective, as in China's space program, the major
weakness is a poor understanding of systems management concepts and
techniques. In the telecommunications network, excessive dependence on
local initiative and self-reliance, instead of centralized coordination and
selected areas
China's leaders, aware of these problems and that modernization must be
more gradual than originally anticipated, have greatly restructured the
modernization program. Development of technologies for light industry,
agriculture, and energy will be given priority. This change in approach and
several successful cases of indigenous S&T development lead us to
conclude that the system is potentially capable of functioning effectively
and of supporting the revised needs of the modernization program in
Initial plans for upgrading domestic S&T capabilities and reforming the
S&T system were to be achieved by decentralizing decisionmaking and
increasing the autonomy of the operating unit. Some of these reforms have
been postponed by the imperatives of economic readjustment. Various
centralized controls have been reasserted in selected areas to ensure that
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August 1981
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research activities make a more direct contribution to the modernization
program. The initial goal of modernizing all domestic S&T capabilities has
given way to increased emphasis on applied R&D. Budgets for basic
research programs-such as high-energy physics-have been cut so that
the limited financial resources can be given to production-related activities.
Scientists have been given a greater role in S&T policymaking to reduce in-
efficiency and to ensure that modernization projects meet acceptable
scientific criteria. During the Cultural Revolution, people were placed in
key S&T positions on the basis of their political credentials rather than
their technical qualifications. Problems still exist in trying to replace these
personnel with more competent individuals. Efforts have also been made to
place younger, well-qualified people in positions of authority within
educational and research organizations.
Large numbers of students and researchers have been sent overseas for
advanced training, while domestic educational programs are being
strengthened. Despite some success in improving personnel allocation and
training, however, the dearth of qualified technicians and scientists in
China probably will continue to be a serious constraint on the moderniza-
tion drive well into the 1990s
A variety of economic and financial factors also will have a major impact
on the modernization pro ram particularly with respect to the importation
of foreign technology.
While China's top leaders have
shown more willingness to rely on foreign technologies to support moderni-
zation, the acquisition of foreign technology and equipment has not, in
many cases, produced the desired results. Emphasis has been shifted,
therefore, from purchasing whole plants and equipment to renovating and
rehabilitating existing enterprises. A greater effort will be made to secure
technologies more appropriate to China's large labor force and inadequate
energy output. Technology imports once again will be closely reviewed by
the central economic authorities to ensure a better match between foreign
purchases, local needs, and resource availabilities.
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A shortage of foreign exchange also will continue to restrict China's ability
to import foreign technology, particularly since the Chinese remain
reluctant to incur high levels of foreign debt, except at concessionary rates.
Initially, China had hoped to finance much of its technology imports
through expansion of petroleum exports. This has not proven feasible in
view of the continued technical constraints inhibiting rapid expansion of
petroleum production. In addition, modernization has led to increased
energy consumption in China, further reducing the availability of petrole-
um for export.
Finally politics promise to continue to influence in the modernization
program. Because policy was reversed frequently in the past, many S&T
personnel are skeptical about becoming fully committed to the new
policies, and political concerns have made many scientists reluctant to take
the initiative to start new projects or introduce major technical innovations.
Many of the country's leaders remain concerned about the long-term
cultural and political impact of foreign ideas and technology on Chinese so-
ciety. In any case, the success of the modernization program in general,
and the modernization of science and technology in particular, will depend
upon the maintenance of a political consensus supporting the primacy of
the economic objective. Even if China can remedy its technical deficien-
cies, the effort to advance S&T capabilities in areas relevant to moderniza-
tion will fall significantly short of its goals without political stability.
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Politics, Modernization, and S&T Policy
3
The Manpower Requirements of S&T Modernization
6
The Chinese Machine Building and Industrial Ministries 27
The Structure and Operation of China's S&T System 25
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The Status of
Science and Technology in
China's Modernization Effort
Since the mid-1970s, China has been engaged in a major modernization
program designed to enhance national security while promoting long-term
self-reliance. The roots of the program, known as the "four moderniza-
tions," date back to former Premier Zhou Enlai's 1975 address to the
Fourth National People's Congress. The program gained full momentum in
late 1976 after the death of Communist Party Chairman Mao Zedong and
the arrest of the radical "Gang of Four." Program objectives, as stated by
the Chinese, were to upgrade agriculture, industry, national defense, and
science-including technology capabilities-to advanced world levels by
the year 2000. This paper will assess the status of science and technology in
China's modernization program, including Chinese S&T capabilities and
the performance of China's R&D system
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The Status of
Science and Technology in
China's Modernization Effort
China's "Four Modernizations" Program
Since the mid-1970s, China has been engaged in a
major modernization program designed to enhance
national security while promoting long-term self-
reliance. The roots of the program, known as the
"four modernizations," date back to former Premier
Zhou Enlai's 1975 address to the Fourth National
People's Congress. The program gained full momen-
tum in late 1976 after the death of Communist Party
Chairman Mao Zedong and the arrest of the radical
Gang of Four.
Program objectives, as stated by the Chinese, were to
upgrade agriculture, industry, national defense, and
science-including technology capabilities-to ad-
vanced world levels by the year 2000. In February
1978, a set of modernization goals were spelled out
that included construction of 120 large-scale indus-
trial projects and ambitious production targets for
steel and agriculture. Recognizing the backwardness
of their industrial and S&T base, the Chinese showed
a greater willingness to import foreign technologies
and to engage in international commerce. Reform of
the existing system of management in industry, edu-
cation, and research was also stated as a primary goal.
Without such a comprehensive modernization pro-
gram, its supporters argued, China would remain
weak and vulnerable.
Initiation of the growth-oriented modernization pro-
gram revealed that the Maoist approach of giving
primacy to political values had been relegated to
secondary importance. Generally speaking, policies in
effect during the Maoist era had greater social equity
as their primary goal. This emphasis on egalitarian-
ism implied acceptance of a slower growth rate for the
national economy in the hope of alleviating three
major areas of inequality in Chinese society: the
urban versus rural sectors, industry versus agricul-
ture, and intellectual versus manual labor. In con-
trast, the "four modernizations" program was an
attempt to speed up economic development to improve
more rapidly the people's livelihood and to strengthen
national economic, defense, and technological capa-
bilities.
By early 1979 Chinese leaders realized that their
initial goals for modernization were overly ambitious,
that the details for implementing the program had
been obscure, and that the priorities for allocating
scarce financial and technical resources were loosely
defined, at best. Although China had begun extensive
purchases of foreign technology and equipment in 25X1
1978, economic limitations and a lack of qualified
technical personnel soon impinged upon the country's
ability to acquire and to absorb imported technology
for its modernization program. Other bottlenecks,
such as an underdeveloped and poorly distributed
transportation system, insufficient energy supplies,
and a lack of coordination among relevant organiza-
tions also helped to slow the pace of modernization.
The Chinese leaders' recognition of these problems-
a necessary step in any attempt to develop appropriate
solutions-led to formulation and implementation of a
readjustment program in early 1979. In this program,
the Chinese leadership gave increased emphasis to
agriculture and light industry and scaled down many
of the goals and projects in the original modernization
plan.
The full extent of China's problems, however, became
apparent during late 1980. Efforts to readjust the
modernization program were meeting only limited
success, and the imperatives of readjustment were
clearly in conflict with ongoing efforts in economic
reform. In particular, the Chinese leadership recog-
nized that economic readjustment required increased
control by the central political authorities to ensure
adherence to new policies and guidelines; economic
reforms, which were aimed at decentralizing eco-
nomic decisionmaking and management to stimulate
local initiative, had resulted in deviations from the
goals of readjustment. Domestic problems including a
growing budget deficit and rising inflation were
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among several factors that forced cancellation or
postponement of several major development projects,
including the highly touted Baoshan steel mill and the
Dexing copper mine. Severe limitations were placed
upon future capital construction, and work on several
large petrochemicals projects was suspended indefi-
nitely as the result of economic cutbacks and inade-
quate supplies of feedstocks and raw materials to run
the plants.
By the end of 1980, the momentum and optimism
characterizing the modernization program at its in-
ception had been lost. As the result of a party work
conference in December 1980, China's top leaders
codified their readjustment program and continued
the long process of realigning their priorities. The
leadership began to scale down their goals still further
to better reflect financial, personnel, and resources
limitations. Efforts to ensure adherence to the various
elements of the readjustment program continued
throughout the first half of 1981.
Modernization of Science and Technology
Throughout the course of the modernization program,
science and technology have continued to be high-
priority items as far as the investment of financial and
personnel resources is concerned. Closing the technol-
ogy gap between China and the West and overcoming
the obstacles to greater technological self-reliance are
the two dominant goals underlying current S&T
policy. The Chinese consider S&T modernization to
be a necessary prerequisite to the successful comple-
tion of the three other areas covered by the "four
modernizations" movement: agriculture, industry,
and national defense.
In March 1978 the Chinese announced a comprehen-
sive national S&T plan. This provided the basic
blueprint for the S&T modernization, and delineated
eight areas where S&T efforts were to be concen-
trated: agriculture, energy, materials, electronics, la-
sers, space, high-energy physics, and genetic engineer-
ing. Some fields were chosen because they had the
potential to contribute to the modernization program,
others because key S&T leaders desired to use basic
research as a means to reintegrate Chinese scientists
into the world's scientific community.
The decision to undertake such a comprehensive S&T
modernization program must be viewed within the
context of lingering effects of the Cultural Revolution
on the Chinese scientific community and educational
institutions. The Cultural Revolution in the late 1960s
was a political movement in China, designed to
promote radical egalitarian Maoist goals. It had a
devastating effect on scientific research and training
in China: both virtually ceased for almost 10 years.
Although the direct impact of the Cultural Revolution
varied considerably from one institute to another-
depending on the protection afforded by the political
leadership and the visibility of the institute and its
members-most were disrupted to some extent.
Scientists were ridiculed for their "elitist" attitudes.
Foreign-trained Chinese scientists were suspected of
treason; many were sent to work in factories or on
farms. Some scientists committed suicide or were
physically abused. China's scientific community was
isolated from the research of other countries. More-
over, Chinese scientists were prevented from continu-
ing their own research in China.
The radicalism of the Cultural Revolution and the
Gang of Four reinforced the tendency of both Chinese
S&T institutes and individual scientists to remain
isolated from each other; scientists were instructed to
learn from peasants and workers rather than from
each other. As the last vestiges of the Cultural
Revolution were removed from the Chinese political
scene, lack of communication remained a major ob-
stacle to S&T modernization.
The Cultural Revolution had a less evident but per-
haps more pervasive influence on the attitudes of the
Chinese population, in general, and the intellectuals,
in particular. Since then, many S&T personnel have
taken a very cautious approach toward the current
changes in priorities. A large number have been
reluctant to become fully committed to new projects
and policies. This has created a sluggishness in re-
search and production, because many scientists have
been unwilling to take the necessary initiative to
launch new projects or to accept the responsibility for
overseeing those already in existence.
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The scientific stagnation left China's S&T capabili-
ties 10 to 20 years behind advanced, modern levels. To
revitalize their S&T system and to stimulate scientific
advancement, Chinese leaders decided to send large
numbers of graduate students and scientists abroad
for advanced technical training. Chinese universities
reintroduced scientific curricula. Scientific personnel
were given increased responsibilities in economic or-
ganizations, as well as those for research and develop-
ment. Chinese leaders encouraged the acquisition of
foreign technology as a means of remedying S&T
deficiencies. By foregoing the more gradual approach
of developing technologies indigenously, the leaders
believed that foreign technology and training could
become the foundation for closing the S&T gap
between China and the advanced nations by the year
2000.
Revision of China's basic modernization plan in 1979,
however, forced the leadership to reassess its S&T
modernization strategy. As a result, Chinese leaders
gave increased attention to areas with near-term
practical applications. They issued a revised list of
priority areas: agriculture, energy, materials, commu-
nications, electronics, and space. In most cases, the
selected areas constituted critical bottlenecks in the
modernization program. More importantly, the Chin-
ese leaders began to recognize that advanced S&T
alone were not the solution to China's problems.
Other more fundamental stumblingblocks stood in the
way of both economic and S&T modernization, in-
cluding managerial, attitudinal, organizational, and
financial problems.
By the beginning of 1981, the imperatives of economic
readjustment resulted in further changes in China's
S&T strategy-the foremost being the postponement
and in some cases, the cancellation of several major
development projects involving large inputs of foreign
technology and technical assistance. Above all, eco-
nomic and financial considerations forced the Chinese
to become more selective in their technology acquisi-
tion. The emphasis on purchasing whole plants and
equipment that formerly was characteristic of the
initial phase of S&T modernization has been altered.
Today, greater emphasis is being given to the renova-
tion of existing plants and equipment. Current policy
is to purchase from abroad only those technologies the
Chinese cannot develop quickly enough themselves
and only the technologies they can rapidly absorb.
China's top economic administrators have given
instructions that all available versions of technology 25X1
must be thoroughly investigated before a purchase
will be approved. Particular emphasis will be given to
technologies applicable to agriculture, light industry,
and energy, as well as technologies characterized by
high labor intensity and low energy consumption. r
The Chinese leadership has again altered research
priorities and policies. The original goal of moderniz-
ing the complete spectrum of China's S&T institu-
tions now reflects even greater emphasis on applied 25X1
research. Most S&T projects must produce economic
benefits and must make tangible contributions to the
modernization program. Technological choices are to
be based upon local needs and capabilities, rather
than upon purchasing the most up-to-date technol-
ogies. These new policies are designed to further
reduce waste of material and financial resources, a
problem since the outset of the modernization pro-
gram.
Although the S&T modernization program has faced
cutbacks, the cutbacks are less severe than in other
parts of the readjustment program and reflect greater
emphasis on applied research. The decision in early
1981 to postpone indefinitely a major project on high-
energy physics confirms this new policy orientation
away from basic research.
Politics, Modernization, and S&T Policy
sisting efforts to disengage politics from science
Despite the spectacular reversals in various policy
areas since the death of Mao, both the party and state
bureaucracy apparently are not easily malleable.
Some S&T administrators-many of whom rose to
positions of authority during the Cultural Revolu-
tion-have a vested interest in maintaining their
positions. Large numbers of such individuals are still
in place. These well-established bureaucrats are re-
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As a result, foot-dragging and incompetence continue
to plague Chinese attempts to remold the S&T sys-
tem. Realizing these problems, the Chinese leadership
is attempting at both the national and local levels to
replace and retrain officials who fail to support
wholeheartedly Deng's modernization program. Deng
and his supporters probably will succeed in overcom-
ing this opposition. Some progress has already been
made in replacing these individuals as evidenced in
the recent elections held at the Chinese Academy of
Sciences in May-June 1981. Extensive reforms, how-
ever, will be slow and eventually may impinge ad-
versely upon China's ability to modernize S&T.F_
The extent to which the country should import foreign
technologies continues to be the subject of an ongoing
political debate in China. Some officials fear that
overreliance on foreign technology will seriously dis-
rupt Chinese society, adding stresses to the political
system and increasing dependence-real or per-
ceived-upon other countries for training, and for
technical and financial assistance. In particular, these
people are concerned over debasement of Chinese
capabilities by those who have developed an admira-
tion for Western scientific and technological progress.
How much of the Chinese "essence" the leadership
can safely sacrifice to accommodate the imperatives
of obtaining desperately needed foreign technology
and managerial and organizational assistance will be
a focal point of political debate in the 1980s. We
believe the Chinese will continue to encounter diffi-
culties in arriving at a technologically appropriate and
politically acceptable balance between self-reliance,
selective borrowing, and outright dependency.
China has been contemplating the issue of how to
utilize Western technology for over 100 years. Find-
ing a workable solution to this question has become
politically imperative. Throughout 1979-81, the Chin-
ese press published numerous articles defending the
import of foreign technologies and the use of foreign
advisers during the 19th century, implying that there
is still some opposition to similar programs today.
These articles also have stressed that China must be
more selective in its efforts to acquire foreign technol-
ogy. Similar concern exists about the long-term ef-
fects of foreign ideas from movies, advertising, and
books upon China's social order. If opposition to such
"social pollution" grows, participation by foreigners
or introduction of foreign technology into the moder-
nization program will become increasingly difficult.
Some observers also have commented that the "rush"
to modernize S&T in China in the late 1970s has led
to additional political problems and pressures. The
case of the Baoshan steel mill, a large-scale capital
construction project involving West German, Japa-
nese, and US participation, is illustrative. In Septem-
ber 1979, a high-ranking Chinese official admitted
that although the Baoshan project was ill-conceived, it
continued to receive support from the leadership,
because it had been set up as a premier part of the
modernization program. A number of technical mis-
takes resulted in wasting large amounts of foreign
exchange. The site of the Baoshan project was unsuit-
able from an engineering standpoint. In addition,
large ore carriers cannot berth nearby, making it
difficult to supply the mill with needed raw materials.
Although considerable expense might have been saved
by reassigning technicians from the Anshan steel
complex to build the plant, regional political rivalries
between North and South, and Shanghai's desire for a
more modern plant than Anshan-and not technical
feasibility-led to the decision to undertake the proj-
ect. In late 1980-because of the large costs, the
imperatives of modernization readjustment, and con-
tinued political criticism-China was forced to post-
pone construction plans for phase two of the project
and has suspended almost all work in phase one.
Although the Chinese have reiterated their intention
to proceed with phase one, final completion will be
substantially delayed until the technical problems can
be sorted out. A few Chinese leaders have placed part
of the blame for the project's problems on Japan,
claiming that the Japanese gave China unsound ad-
vice regarding the feasibility of the Baoshan mill.
Political pressures stemming from the rush to mod-
ernize also caused key decisionmakers striving to
attain production objectives to forgo safety measures
and proper maintenance procedures. As in the past,
the Chinese have tended to neglect such consider-
ations. Between 1975 and 1980 the Chinese press
reported about 1,000 accidents associated with the
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operations of the Oceanic Petroleum Exploration Bu-
reau. One widely publicized incident-among several
recently in the Chinese press-occurred on 25 No-
vember 1979, when the Bohai Number 2 oil rig
collapsed and 72 lives were lost. The media recently
acknowledged that the Bohai team leader had submit-
ted three separate warnings to the Ministry of Petro-
leum concerning the safety of the rig. Apparently,
because of the pressures to continue and to complete
the operation, the Ministry-already under fire for its
poor handling of China's petroleum development-
ignored these warnings. On 26 August 1980, the
Minister of Petroleum Industry, Song Zhenming, was
replaced because of the Bohai accident.
Economic factors-primarily a shortage of investment
capital and foreign exchange, as well as inflation-
constitute serious constraints on Chinese S&T devel-
opment. A major problem plaguing the modernization
program since its inception has been that the Chinese
have attempted to do too much too fast. Major budget
deficits have resulted. Political and economic leaders
apparently did not perceive the actual costs of the
program.
Because the Chinese initially had hoped to finance a
large portion of their modernization program through
the rapid expansion of petroleum exports, offshore
petroleum development was given a high priority. By
late 1980, however, it appeared that exploitation of
both onshore and offshore areas would be much more
gradual than originally anticipated and that expan-
sion of oil exports would be limited at least until 1985.
The increasing energy requirements of the moderniza-
tion program further reduced the likelihood that
China would be able to rely on petroleum exports to
finance the purchase of foreign technology.
To remedy financial shortfalls, the Chinese recently
have shown a greater willingness to borrow needed
funds from abroad, although only at concessionary
rates. In early 1980, China and Japan signed a major
loan agreement to help finance the construction of six
major projects related to energy development. The
Chinese have been offered additional loans and
credits for projects from several countries, although
they have yet to take advantage of these offers. China
has joined the World Bank and the International
Monetary Fund, and has secured development-related
assistance from both organizations. The Chinese hope
to use World Bank assistance to upgrade the domestic
education system and to finance additional hydro-
power development projects. International Monetary
Fund assistance has been used to help manage the
country's balance-of-payments problems. The Chinese
also have held discussions with the United States
regarding financing from the Export-Import Bank, 25X1
and in May 1981 signed two agreements, a memoran-
dum of understanding on financing procedures and a
loan agreement.
The Chinese have promulgated a new foreign invest-
ment law to help alleviate some of their financial
problems by promoting joint ventures (equity and
nonequity) between foreign firms and the Chinese
Government. A structure to promote compensation
agreements, whereby a foreign partner receives a
portion of the output in return for bringing technology
and equipment to China, also has been developed.
Because of considerations such as political stability, 25X1
economic performance, and the overall vagueness of
the legal and financial aspects of Chinese law, many
foreign investors have been reluctant to undertake
projects. Domestically, the rapid expansion of equity-
based joint ventures has been the target of some
opposition, thus further delaying the expansion of
these ventures. In the future, the framework of joint
ventures, however, may be the only viable means for
China to secure foreign technology and to finance
badly needed projects.
In the final analysis, the Chinese leadership still
remains apprehensive about expanding greatly the 25X1
extent of their external debt. A major factor behind
Chinese thinking has been the country's experiences
with the Soviet Union in the 1950s and the Western
nations in the early 1970s, which were criticized for
both economic and political reasons. Thus, the
Chinese remain concerned about the potential costs of
becoming overly dependent on external sources for
financing modernization.
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Major questions of economic priorities have in-
fluenced the course of S&T modernization. Policy
disputes revolving around the issue of greater decen-
tralization of decisionmaking, for example, have
served to leave the lines of authority only vaguely
defined. In many cases, the Chinese bureaucracy has
been unable to formulate clearly stated policies. Even
when policies have been announced, the bureaucracy
has lacked the capabilities and authority to implement
them. Economic decisions and foreign technology
purchases have been made without adequately consid-
ering the availability of critical inputs and resources.
The current program of economic readjustment has
been designed to remedy some of these problems. For
example, all large foreign technology purchases will
be more closely scrutinized; strict controls have been
placed on the allocation of foreign exchange to avoid
purchases without the approval of the control authori-
ties. Financial scarcity and bureaucratic obstacles,
however, will continue to slow significantly the pace
of the entire modernization effort.
The Manpower Requirements of S&T Modernization
A shortage of qualified technical personnel is another
major constraint. As a result of the political turmoil
created by the Cultural Revolution, China's major
educational institutions were closed, and most of the
facilities that trained young people in fields such as
engineering and natural science were shut down for
almost 10 years. In 1978, China's State Science and
Technology Commission (SSTC) conducted a nation-
wide survey to obtain statistics on the number and
qualifications of technical and scientific personnel.
This survey revealed that an inadequate number of
qualified personnel is China's most serious problem.
Among S&T personnel who have had high-quality
formal training in China or overseas, many are old
and incapable of exercising a' direct role in the day-to-
day operations of active research laboratories. These
inadequacies have created a serious strain on China's
S&T personnel resources, because the Chinese have
yet to develop a successful strategy for the effective
and efficient use of their limited number of qualified
personnel.
China's S&T community can be divided into four
basic groups or "generations," with varying degrees of
expertise and training. The first group is comprised of
personnel who were trained in Western universities
and returned to China at the time of the Communist
takeover. With an average age over 60, these people
are steadily decreasing in number.
The second group includes personnel trained in China
or the Soviet Union during the 1950s and early 1960s.
These people, who are in their forties and fifties, have
had very specialized training and remain conditioned
to working in a Soviet-style work environment-one
in which a worker is given little incentive to pursue
innovative ideas and projects. Because they have had
some technical training, however, the majority of the
students and scholars selected for the initial overseas
study program in the late 1970s came from this group.
Most of the third group are technical personnel and
political workers appointed to S&T jobs immediately
after the Cultural Revolution. This group includes the
first people to receive formal education after the
interruptions of the Cultural Revolution. Although a
sizable number now hold positions in Chinese re-
search institutions, members of the group lack the
background and technical training to spearhead the
sustained modernization program planned by the
Chinese leadership. Many obtained their positions or
entered higher education only by virtue of their
political credentials.
The fourth group is comprised of people being trained
within rehabilitated Chinese universities. Some even-
tually will be sent overseas for advanced training,
once they complete their undergraduate training in
China. This group constitutes the country's main hope
for meeting the technical demands of the moderniza-
tion program. In 1981 Chinese universities will grad-
uate the first class to have entered higher education
after the fall of the Gang of Four. Although the
quality of university students has begun to improve, it
is still too early to evaluate their full technical
competence.
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The Chinese education system must be greatly im-
proved and expanded before it can produce an ade-
quate number of qualified persons to fill key positions
in research organizations and institutions of higher
education. A major question still to be resolved is
whether the existing well-trained cadre should be used
in a teaching or research capacity or should be sent
overseas for advanced education. Until this issue is
settled and more competent teachers can be trained,
the goal of effecting an almost threefold increase in
the number of scientists-to 800,000 by 1985-which
was announced in the 1978 S&T modernization plan,
appears impossible to achieve. Currently, only 3 per-
cent of all high school graduates (approximately
270,000 in 1980) can receive higher education, an
inadequate number in view of China's pressing needs
for qualified scientists and technicians. Any inability
to alleviate the current shortage of qualified S&T
personnel will affect detrimentally the pace of China's
modernization program.
Extensive efforts have been made to move younger
persons into positions of authority within both re-
search and education institutions. For example, dur-
ing the May 1981 meeting of the Chinese Academy of
Sciences, younger scientists were elected to key
decisionmaking offices to ease the transition to a new
Academy of Sciences leadership in the future. Bottle-
necks in replacement of older or less qualified persons
in the S&T system, however, are still prevalent.
Promotion on seniority only is very common. These
problems-unless quickly rectified-also will reduce
the likelihood of China's meeting its modernization
goals by the year 2000.
the-art technologies but also an adequate S&T infra-
structure and pool of qualified S&T personnel to fully
utilize existing resources and to effectively assimilate
foreign technology. This is true in both the civilian
and military sectors. The major constraints on S&T
modernization in each area result from ineffective
management, a continued inability to clearly define
priorities, and a lack of institutionalized channels to
effectively translate research findings into actual pro-
duction results. Current Chinese efforts to remedy
these problems have led to isolated examples of
research and development successes, but as a whole,
the system remains caught in a web of bureaucratic
inertia. During the past few years, China has ex-
panded its understanding of the country's primary
S&T-related deficiencies. In addition, the Chinese
also have increased their knowledge of the interna-
tional technology market and alternative technology
suppliers. These efforts, however, will have little
impact on the modernization program until existing
constraints-technical and organizational-can be
overcome.
Agriculture
China's basic goal in agricultural modernization is to
increase the country's food supply so that its growing
population can be fed. Chinese agricultural moderni-
zation is aimed at improved crop varieties, plant
protection, fertilizer and agricultural chemicals, irri-
gation and water management, farming methods and
management, and mechanization. Advances in most
of these areas have contributed to increased Chinese
agricultural production during the past 10 years, but
the Chinese recognize that achieving modernization
goals will require still further improvements in agri-
culture, including the adoption of foreign technology.
This section of the paper will focus on six key fields in
which S&T modernization has been actively pursued.
In many respects, Chinese successes and problems are
representative of the situation in other fields. Each
area is analyzed from the perspective of development
priorities established by the Chinese leadership.
The major point emerging from this analysis is that
the key to the Chinese S&T modernization drive lies
not merely in acquisition or development of state-of-
Considerable disagreement has existed as to whether
priority should be placed on biological or mechaniza-
tion technology. Some leading Chinese experts hold
that scientific research on improved plant varieties,
fertilizers, and pesticides, as well as improved irriga-
tion, should be emphasized first, with mechanization
a longer term goal. The scientists point out that
emphasis on multiple-cropping requires planting early
maturing varieties and using more organic and chemi-
cal fertilizers for the two or three crops per year.
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Other experts favor giving priority to mechanization
of agricultural processes (cultivating, intertilling, har-
vesting, drying, storage, weeding, and application of
fertilizers and pesticides, with less emphasis on agri-
cultural research and chemicals). These scientists note
that multiple-cropping requires more frequent plant-
ing and harvesting, which could be done more effi-
ciently by machines. They also cite as the benefits of
mechanization-timeliness of farm operations, quick
turnaround time in multiple-cropping, reduced grain
losses through machine harvesting and drying, and
reduction of draft animal population (thereby increas-
ing meat production).
That unemployment would be a major drawback to
extensive farm mechanization, however, is commonly
recognized in China. Unemployment is already a
major problem that no one wants to exacerbate.
According to present Chinese thinking, increased
mechanization will be considered only for planting
and harvesting; other operations will continue to be
done by hand.
That mechanization cannot be effective without in-
creased yields also is recognized. Larger yields re-
quire, in turn, improved crop varieties, extensive
application of fertilizer, and water availability. The
Chinese are beginning to adopt features of Japanese
agricultural modernization, which began with in-
creased use of chemical fertilizers and high-yielding
varieties of seed, as well as improved irrigation. The
Japanese developed and used mechanized equipment,
specially tailored to Japan's agricultural endowments.
Recently, Japan has provided China with agricultural
chemicals, farm machinery, and other agricultural
inputs. Numerous science and technology exchanges
between the two countries have facilitated Chinese
understanding of the pitfalls of expanding the scope of
mechanization too rapidly.
Areas of particular interest to the Chinese are plant
breeding for crop resistance, crop physiology research,
and experimental design and analysis of research.
Because more scientists qualified in these areas are
drastically needed, China is exchanging scientists and
training Chinese students under agricultural S&T
agreements with the United States and other coun-
tries. With the recently increased emphasis on agri-
culture, even more scientists and students will be sent
abroad for training.
At the national level, the Chinese are pursuing the
acquisition of germ plasm as genetic sources of dis-
ease- and pest-resistance for major crops and as a
means to broaden the available genetic base of Chi-
nese plant breeding. This research is being done in the
Beijing research institute for crop germ plasm under
the Academy of Agriculture and Forestry. The Chi-
nese learned the value of germ plasm when they
developed hybrid rice varieties, largely at the Hunan
rice research institute, using restorer lines of high-
yielding semidwarf varieties developed in the Philip-
pines. These areas of research-as well as biological
fixation of nitrogen and enhancement of photosyn-
thetic efficiency-must be further developed as a
foundation for all agricultural research and are being
pursued by Chinese scholars taking advanced training
in the United States.
China's purchases of foreign agricultural machinery
can be expected to increase as agricultural moderniza-
tion plans are implemented. Equipment purchases,
however, will be constrained by unemployment con-
siderations and by China's small plots and terraced
fields that restrict the amounts and types of equip-
ment that can be useful. Only on large plains-as in
northeast China-can the Chinese apply the large-
scale mechanized farming methods of the West.
In their farm tests of specialized US equipment for
subsoiling, agricultural chemical application, mecha-
nized seed production, and grain drying, the Chinese
already have found that using such equipment in-
creases yields. They also have discovered that irriga-
tion technology-using pumps, metering equipment,
and center-pivot sprinklers-is valuable because it
saves substantial amounts of not only water but also
the land that would be occupied by surface irrigation
systems.
The Chinese want to expand sprinkler irrigation. For
now, however, they are holding up large purchases of
this and other types of farm equipment while they
ascertain the merit of investing scarce foreign ex-
change. Similarly, they are refraining from purchas-
ing foreign agricultural chemicals and production
technologies to minimize dependence on foreign
sources and to strengthen domestic production and
research capabilities.
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Energy Production and Transmission
China's severe shortage of electric power is a major
obstacle to modernization. Without power, new fac-
tories cannot start up and existing factories cannot
supplement to the energy needs in industrial regions
that lack coal or hydropower, because nuclear power
plants can be sited where needed
operate on a irregular schedule.
The Chinese estimate that 20 to 30 percent of their
existing industrial capacity cannot be utilized because
of power shortages. These are caused by poor plan-
ning and outmoded technologies in every aspect of
power generation-from location and development of
primary energy sources, through energy utilization in
power stations, to the transmission of electricity.
Operation of the Wuhan steel mill in Hebei has been
adversely affected by such problems. Despite their
ambitious plans for the mill, the Chinese discovered
that the electricity in Hebei was insufficient to oper-
ate the plant at projected capacity
Very much aware of the importance of energy, the
Chinese have given energy development plans top
priority. They intend to rely on coal as the main
source of energy, because they know they have vast
supplies. In 1980 approximately 71 percent of China's
energy was produced from coal. The Chinese also plan
to tap their hydropower resources-the largest in the
world. But because the major rivers are located in
southwest China-a long distance from Chinese in-
dustrial areas-the Chinese will require high-voltage
transmission technology, which they do not yet have.
Originally, the Chinese regarded oil as a source of
foreign exchange to help pay for modernization proj-
ects, but this potential became uncertain as the
Chinese realized that they would require much more
petroleum themselves. (Petroleum accounted for 25
percent of China's energy in 1980.) Moreover, the
Chinese do not know the actual extent of their
resources and cannot expect to substantially increase
oil production before 1985. Inadequate exploration
and exploitation technologies will continue to be a
major constraint.
As a result, the Chinese have given nuclear power
greater importance in their long-term energy plans.
They realize that nuclear energy could be a good
The complexities involved in developing a nationwide
energy system make it difficult to judge when the
Chinese will have enough power to meet their
modernization needs. These needs and the plans to
meet them are changing as the Chinese adjust their
overall economic goals and timetables.
The Chinese proposals to develop energy resources are
becoming more and more realistic as planners get
farther along-realize their past mistakes and antici-
pate future problems, and modify the plans accord-
ingly. The success of this massive task depends not
only upon assimilating the tremendous number of
technologies directly involved in locating, extracting, 25X1
and processing energy resources, but also upon devel-
oping the industrial infrastructure to produce the
machinery needed in these processes-machinery
such as mining equipment, drill bits, and turbines.
Also needed are important supporting elements, such
as railroads to transport coal to power stations.
Historically, China has underestimated its needs in
developing railroad lines to support energy-related
transportation requirements.
As in other areas of modernization, the Chinese do I
not want merely to buy equipment from abroad.
Rather, they prefer to learn how to produce the 25X1
equipment themselves. This requires a large cadre of
skilled engineers and technicians, which China does
not have. To meet this deficiency, the Chinese are
sending scores of people overseas as students to
Western universities and as delegations to visit all
kinds of energy facilities in an attempt to learn
modern technologies.
If China can maintain an even political keel and
continue its present emphasis on energy development,
we estimate that the modernization plans, the supply
of technical manpower, and the industries themselves
will begin to crystallize and will become coordinated
by 1985. Another five years probably will be needed,
however, to show concrete results in increased energy
supplies.
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Coal. Increasing the quantity and quality of coal
production has been made even more essential by
China's continued reliance on coal as the major
domestic source of energy. The Chinese plan-where
possible-to convert their boilers from oil to coal. To
meet the resulting increased demands for coal, the
Chinese need to increase mechanization of their coal-
mining processes, including higher capacity and more
efficient extraction, loading, processing, and hauling
systems. At present, only 30 percent of China's coal
comes from fully mechanized operations.
The Chinese should have little difficulty in adapting
to the use of modern, high-speed machinery, because
they have experience in mechanized, underground
mining methods. They may encounter difficulty, how-
ever, in designing underground and open-pit surface
mines because they are not experienced in designing
for high-capacity operations. In order to design mines
capable of using modern equipment efficiently, the
Chinese will need to improve their drilling and seismic
programs so that they can delineate precisely the size
and shape of deposits for accurate mine layouts
The Chinese are limited in their capacity to purchase
modern mining machinery abroad because of a short-
age of foreign exchange and their desire to avoid
excessive dependence on foreign sources. China's ulti-
mate goal is to manufacture its own modern mining
equipment. This, however, will present a vast array of
problems in industrial technology and infrastructure,
involving machine design, metallurgy, hydraulics, and
quality control.
To meet the demand for better quality, the Chinese
need to process more coal. At present, only 10 to 15
percent of their total production is processed; this coal
is exported or is used in steel manufacturing. To
replace existing methods, China needs modern, high-
capacity crushing, sizing, and washing equipment,
and the flotation technologies upon which this high-
capacity equipment is based
The most vital problem facing China in obtaining
energy from coal is transportation of the coal itself.
China's railroads cannot move the coal to power
plants as fast as it is mined. As a result, the Chinese
lack sufficient electricity to run their electrified
To speed development of its coal industry, China
negotiated agreements in 1978 and 1979 with West
Germany, France, Great Britain, Japan, Yugoslavia,
Romania, and Poland. The Sino-Japanese agreement
for coal development is of particular interest, because
it includes financing for technology purchases and
technical assistance. The Chinese also purchased a
wide variety of mining and processing equipment from
the United States and other countries-apparently to
survey the variety of coal technologies and equipment
available and to determine what is most suitable for
their purposes.
The Chinese have sent numerous delegations to study
coal equipment and technologies in foreign countries.
Hoping to make sales, these countries have welcomed
the Chinese and have reciprocated with coal delega-
tions to China. In general, the exchanges have pro-
duced few concrete sales, but the Chinese undoubt-
edly have benefited from their exposure to modern
mining equipment and technologies.
The Chinese now are caught up in readjusting their
economic priorities and allocations of precious foreign
exchange and in determining what kinds of contract
conditions would be most beneficial. They have invit-
ed several countries to submit proposals for joint
ventures, but inasmuch as China has not set definite
conditions for these ventures, foreign countries are
refraining from definite commitments
Oil. China's modernization program will create de-
mands for increased oil production, not only for
domestic needs as energy, lubricants, and feedstocks
that will increase as the country becomes more indus-
trialized but also as a source of foreign exchange to
help pay for modernization. At this point, however,
China is having to reduce its oil exports, because its
oil production has leveled off, and its own require-
ments have increased.
The Chinese have done well up to now in locating and
extracting oil with the equipment and technologies
they possess, but it has been "easy" oil. The Chinese
admit they will not be able to increase production
with their current equipment and technology.
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A major Chinese deficiency is outmoded seismic
technology that does not provide resolution of suffi-
cient clarity to locate subtle, complex, oil-bearing
structures. Further, Chinese seismic data are often
poorly processed, making accurate analysis difficult.
As a result, China is in desperate need of higher speed
computers to process the tremendous volume of seis-
mic data being collected. Another problem is that
geophysical data often are not correlated with geologi-
cal data. As a result, many wells are drilled in poorly
selected locations, resulting in substantial misalloca-
tions of limited financial and technical resources.
Most recently, however, many of these problems have
been at least partially alleviated by the technical
assistance and data processing provided by foreign
firms working both in offshore and inshore areas.
As with many industries in China, an unevenness in
technical sophistication exists from place to place.
This probably reflects the scarcity of equipment and,
more importantly, the shortage of skilled technical
personnel; both are distributed unevenly and spread
too thin. The resulting disparities are exacerbated by
a lack of communication among various oilfields and
the Chinese reluctance to deviate from procedures
that have been successful in one place but may be
unsuitable under different geological conditions.F_
Drilling rates are slow because the Chinese lack in-
depth expertise. For example, they seem not to realize
the value of using drilling mud, which is needed to
lubricate drill bits and to flush cuttings from drill
holes. If the Chinese have mud equipment, they often
do not connect it or they operate it improperly.
Further, their drilling mud techniques are sometimes
so poor as to be almost ineffective.
In-depth expertise also is lacking in China's methods
of high-pressure drilling control. If the Chinese have
blowout preventers, they often do not install the
equipment. They seem not to realize the value of the
preventers-that blowouts decrease reservoir pres-
sures and cause delays. In some instances of abnor-
mally long drilling times, where underpowered rigs set
up a succession of inefficiencies in the use of drilling
tools and hoisting systems, the Chinese lacked the
technical knowledge to identify the source of the
problems. Relatedly, because the Chinese lack tung-
sten carbide technology, Chinese-made drill bits wear
out quickly, necessitating frequent, time-consuming
replacement.
Initially, the Chinese limited their requests for foreign
assistance to exploration techniques for offshore
areas. Recently, however, they expanded their aid
requests to include onshore areas as well. US, Japa-
nese, French, British, and Dutch companies are con-
ducting seismic surveys off the Chinese coast at their
own expense, hoping to be invited to develop what
they find. In May 1981 the Japan-China Oil Develop-
ment Corporation made a significant oil discovery in
the Bohai Gulf. The company hopes to begin commer-
cial production by 1986. French and US companies
are conducting onshore seismic surveys in far western
China to delineate more precisely the known oil
deposits. The Chinese also have requested French
assistance in processing some Chinese seismic data
and have explored the possibility of obtaining US
computers.
The Chinese are attempting to acquire foreign oil-
extraction technologies. After two years of negotia-
tions, the Chinese signed a contract in mid-1980 that
will give them the US design and manufacturing
technology they need to produce high-quality drill
bits. We have some evidence, however, that this
contract was canceled when all foreign exchange
commitments were reviewed as part of the overall
economic readjustment program. If so, the Chinese
decision shows that despite its priority, energy is also
subject to close, budget-cutting scrutiny
Through exchanges of oil delegations and invitations
to Western oil companies to conduct symposia in
China, the Chinese are trying to learn how to improve
extraction techniques. The Chinese have asked some
foreign oil companies to submit proposals on how
China could improve extraction' processes-this may
be only another step in eliciting free advice, or it may
be the basis for signing assistance contracts.
Electric Power. The shortage of electric power ap-
pears to be the result of insufficient capital investment
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over the past 10 years, poor management, and out-
moded equipment. The Chinese have the basic tech-
nologies to manufacture their 1950s-vintage generat-
ing and transmission equipment, but they cannot
produce enough. They also need modern technologies
for equipment to generate and to transmit the higher
voltages required by the expanded industry projected
under their modernization plan and by the longer
transmission distances from remote hydropower
sources.
The Chinese need to make advances in power generat-
ing equipment. They have designed and manufactured
boilers with capacities up to 200 megawatts (MW)
and 300 MW, but they need advanced circulation,
welding, and refractory technologies if they are to
manufacture the 500-MW and 600-MW boilers to
produce more electricity. They can mass-produce 200-
MW steam generators, but not the necessary 300-
MW generators. Chinese delegations studying foreign
power "systems have expressed interest in US and
West European steam turbine technology. They have
discussed purchasing one or two coal-fired power
plants to serve as prototypes. These projects would be
joint ventures or would be placed under licensing
agreements to give the Chinese the capability to build
their own plants.
In developing hydroelectric power, a major problem
for the Chinese has been geologic site surveys of dam
foundations. Samples taken to determine quality of
the foundation rocks are often fragmented, because
the Chinese-made drill bits are inferior, and the
Chinese generally are weak in rock mechanics. Their
lab tests and analyses of rock samples sometimes
produce faulty interpretations, leading to problems in
dam design and tunnel construction.
The active hydropower development agreements
signed with the United States and Japan call for on-
site studies and training of Chinese personnel; rock
mechanics have been singled out as an area of
particular interest. Chinese delegations have surveyed
French, West German, Swedish, US, and Japanese
technologies and equipment. Industry representatives
from these countries have gone to China to present
sales demonstrations of their equipment. Before their
concern over foreign exchange caused them to halt
foreign contracts, the Chinese-still uncertain about
what technology they wanted-were trying to negoti-
ate contracts for Chinese manufacture of equipment.
To cope with the expanded industry of their moderni-
zation program, the Chinese will need at least 500-
kilovolt (kV) systems for power transmission. The
Chinese do not have the technologies, however, for
systems higher than 300 kV, although they have been
seeking foreign assistance to develop these capabili-
ties. Their major power grids are 200 kV; they
manufacture their own 220-kV transformers,. circuit
breakers, insulators, switch gear, and other equip-
The Chinese have one 330-kV line in operation, and
they have produced 330-kV transformers. But their
technical capability to mass-produce transmission
lines at this voltage and tie them into the Chinese
power grid appears stretched to the limit.
Nevertheless, the Chinese are working on 500-kV
systems and have successfully trial-produced their
first 500-kV transformer, representing a new level of
technology in China. Construction has begun on a
500-kV line in northeast China. Much of the neces-
sary equipment will have to be imported because
Chinese technology lags in such areas as sulfur-
fluoride gaseous insulation, arc-interrupters, circuit
breakers, and lightning arresters for 500-kV systems.
The Chinese have signed contracts with France and
Sweden for suitable equipment and technology. Chi-
nese delegations also have expressed interest in US
and Japanese equipment, but they want contracts for
complete manufacturing technology rather than just
purchase of the items.
Through delegations abroad, the Chinese are acquir-
ing vast amounts of information on power transmis-
sion-and they are learning fast. Because of the
desperate shortage of trained personnel, however,
China will require five to 10 years to diffuse the
information to all concerned and to train enough
people to design, produce, and use the quantities of
equipment required to meet modernization goals.
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Nuclear Power. The Chinese are beginning to realize
that nuclear power could supplement the energy needs
of industrial areas lacking adequate coal and hydro-
power resources. In some areas, coal deposits within
reasonable distances of existing industrial power grids
are insufficient for projected thermal power require-
ments. As noted, transportation systems would not be
able to deliver the necessary quantities of coal, there-
fore, without extensive expansion. Hydropower re-
sources that could be developed without displacing
vast numbers of people and covering valuable agricul-
tural lands lie mainly in the remote southwest. Their
location thus presents problems of long-distance,
high-voltage power transmission. The Chinese have
concluded that nuclear power could provide a solution
to these problems, because nuclear plants can be sited
near industry, and transportation of nuclear fuel
would not impose a burden on the transportation
system.
Probably as a result of this realization, China re-
sumed negotiations with France in October 1980 for
the purchase of two large pressurized-water power
reactors. (These negotiations had been terminated in
mid-1979.) Since 1980 provincial authorities in
Guangdong Province have been discussing with Hong
Kong power authorities a joint project to construct a
nuclear power plant in Guangdong that would supply
electric power to both Hong Kong and Guangdong.
The project would provide training and experience to
the Chinese. Indications are that the French reactors
will be used. The Chinese claim they would prefer to
buy nuclear equipment and technology from the
United States, but they do not want to be subjected to
safeguard inspections. (France apparently is less con-
cerned with imposing strict monitoring and inspection
procedures.) If the Chinese go ahead immediately
with the Guangdong project, the power station cannot
become operational until the late 1980s.
China has not made a firm decision to purchase
foreign reactors. Quite probably, such a decision has
been delayed, because it is tied to reappraisals of the
large, expensive projects during the economic read-
justment.
Like other countries contemplating nuclear power,
China has stirred controversy and bureaucratic power
struggles in its recent steps toward nuclear power.
Some Chinese scientists are concerned over safety
aspects, some economists think nuclear power is too
costly, and some bureaucrats are concerned about
foreign interference from safeguard inspections and a
possible increased dependence upon foreign technol-
ogy. The ministries of coal, petroleum, and electric
power-to preserve their own interests-have
emerged as opponents of the nuclear projects advo-
cated by a pronuclear group, composed of the Second
Ministry of Machine Building (nuclear matters) and
the Guangdong Province electric power bureau, as
well as elements of the CAS. Because of the dire need
for energy in China, we anticipate that the pronuclear
group will prevail. Any test of force, however, appears
to have been postponed by economic readjustment
One of the most serious technical problems the Chi-
nese face in any attempt to develop a viable nuclear
power program is obtaining a reliable source of
enriched uranium fuel. (Although unlikely, the Chi-
nese could purchase or develop CANDU-type reac-
tors, which use natural uranium fuel.) Without pur-
chase or development of a nuclear fuel cycle package
that includes uranium enrichment capacity, the Chi-
nese would be forced to sign long-term contracts with
foreign suppliers for most, if not all, of the enriched
uranium fuel they need. China does not have suffi-
cient enrichment capacity to support a substantial
nuclear power program without reducing its military
weapons programs. Indications are that China might
rely initially on foreign-supplied enriched uranium
but would expand its own enrichment capabilities as
soon as possible to eliminate its foreign dependence.
To develop a domestic nuclear power industry, China
will have to rely on appreciable quantities of imported
technology and adaptation of skills and expertise
acquired through its nuclear weapons program. Such
a transfer could save a significant amount of time and
resources. Chinese officials have stated that they have
already shifted several thousand technical personnel
from their nuclear weapons programs to their nuclear
power program.
But technology specifically related to power reac-
tors-such as design and component manufacturing,
as well as special fuel fabrication, materials testing,
and instrumentation-would have to be developed.
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From what is known of their research for developing
their own nuclear power reactors, the Chinese appar-
ently tend to favor a pressurized-water technology.
Although some groups are investigating CANDU-
type heavy water reactors and high-temperature, gas-
cooled reactors, the emphasis to date has been on
pressurized-water technology. This tendency is sub-
stantiated by the greater Chinese interest in pressur-
ized-water types when evaluating foreign reactors.
Also, the known Chinese naval propulsion systems use
pressurized water.
Chinese research on
power reactors ranges from five to 20 years behind the
United States, depending on the area of research. We
believe that China will not develop a commercial
nuclear-power reactor for at least 10 years. Research
has been carried out on fuel-cycle calculations, fuel
assemblies, irradiation of fuels and materials, and
core designs for pressurized-water reactors. But we do
not know how complete this research has been. The
Chinese acknowledge problems with fabricating reac-
tor pressure vessels and with welding cladding materi-
als, as well as with the technology for primary coolant
pumps.
The Chinese have the technical capacity to develop
power reactors, but they have a pronounced lack of
nuclear technicians as a result of the Cultural Revolu-
tion. They also lack skilled craftsmen, such as
welders, electricians, and pipefitters. And they are
equally deficient in the large, rolling mills needed for
making pressure vessels, heat-exchange equipment,
and large steam generators. Whether selected pur-
chases of foreign equipment and technology, plus the
expertise gathered from technicians and delegations
sent abroad to absorb foreign technology, can close
this 20-year gap in 10 years remains to be seen.
needs.
If the Chinese see a need to go full speed ahead on
nuclear weapons development, their nuclear power
program will experience some disruption, because the
required technical personnel are the same for both
efforts. The likelihood and extent of such a disruption
are dependent upon China's willingness to push for-
ward with both programs simultaneously. Indications
are, however, that development of nuclear power is
subordinate to the continued development of strategic
weapons. Such a disruption is probable, therefore,
because the Chinese have said adamantly that nuclear
weapons development comes before domestic power
Energy Conservation
Fully aware of their severe energy problems, the
Chinese recently have introduced numerous measures
and incentives to promote energy conservation within
their industrial sector. In December 1980, Premier
Zhao Zhiyang admitted that energy shortfalls have
caused Chinese industry to run at only 70 percent
capacity. Through the public media, including a
variety of national and local campaigns, Chinese
energy officials have encouraged the adoption of more
efficient energy use. Conservation plans for 1980-81
call for saving 23 million tons of coal, 3 million tons of
gasoline and diesel fuel, 1.5 million tons of fuel oil and
coke, and 7 million megawatts of electricity. Special-
energy commissions have been set up in Guangdong
and Shanghai to implement policies of energy conser-
vation. In view of the existing shortage of funds and
the restrictions on large-scale capital construction,
localities are being encouraged to exploit more fully
alternative sources of energy, such as biogas, geother-
mal sources, and wood fuel. Budgets for research into
conservation-related technologies have been in-
creased. China's ability to meet the energy needs of its
industrial and agrarian sector will be greatly depend-
ent upon the success of these conservation measures.
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Chemical Industry
The technical level of China's chemical industry-
which provides critical materials for agriculture,
heavy industry, light industry, and textiles-consists
of a thin veneer of advanced imported technology,
layered on a base of small-scale, out-of-date processes.
As shown by substantial chemical imports and pur-
chases of whole plants in the 1970s, the industry is not
meeting the country's needs in quality, quantity, or
variety of chemical products. Supplies of basic chemi-
cals for heavy industry probably have kept pace with
industrial needs, but other crucial areas such as
fertilizer and petrochemicals have lagged behind de-
mand. Petrochemicals, of course, have been depend-
ent upon the development of China's oil industry,
which only began in earnest in the 1960s and recently
willingnness to allow foreign technicians to participate
in various projects to facilitate technology assimila-
tion.
Although China is a major producer of chemical
fertilizer, more than half its production from small,
inefficient plants is poor quality. In 1973-74, Beijing
contracted for 13 ammonia/urea complexes from
abroad. But these plants are only now beginning to
operate, because their construction was delayed by a
variety of problems, ranging from a lack of skilled
workers to shortages of natural gas feedstock. China
needs additional capacity for fertilizers containing
nitrogen, phosphorus, and potassium and is seeking
foreign technology for triple superphosphate and com-
has had growth-related problems.
As part of its modernization drive, Beijing is firmly
committed to a policy of importing from the West
advanced technology for the chemical industry. Such
technology importation is hardly a new policy for
China. Several Western petrochemical plants were
imported in the mid-1960s, and about $1.6 billion
worth of petrochemical facilities were purchased from
1972 to 1976. An ammonia/urea plant brought from
Western Europe in the 1960s was adapted and copied,
and became the basis for medium-size fertilizer
plants. The difference today is the scale of imports-
contracts for over $3 billion in chemical plants have
been signed since 1977, with continued priority given
to fertilizers and petrochemicals. China almost cer-
tainly will attempt to copy the technology in these
plants. Most recently, however, imports of whole
petrochemical plants and major investments for con-
struction of large-scale petrochemical facilities have
been curtailed as a result of cutbacks in heavy
industry and capital construction.
Large-scale effort is under way to solve some of the
technology absorption problems that became obvious
during the import program in the mid-1970s. In order
to boost the woefully inadequate number of people
technically qualified to build, to operate, and ulti-
mately, to duplicate these plants, China is rejuvenat-
ing technical education, reopening research institutes,
and sending increasing numbers of technicians over-
seas for study at universities, laboratories, and chemi-
cal factories. The Chinese have indicated a greater
pound fertilizers.
China has sought foreign technology for all phases of
the petrochemical process-from feedstocks to prod-
ucts. Emphasis has been given to synthetic fiber
production-vinylon, nylon, and acrylics-to free
land from natural fiber production, to boost domestic
textile production, and to increase exports. The Chi-
nese also are attempting to increase production capac-
ity for basic plastics and synthetic rubber. To produce
these, they need large-scale production technologies
for basic feedstocks, such as ethylene. In addition, the
Chinese need to ensure that an adequate supply of
petroleum is available to produce sufficient feedstocks
for efficient plant operation. A lack of petroleum-
based inputs was a contributing factor in the cancella-
tion or postponement of numerous petrochemical proj-
ects in 1979-80.
Production of industrial chemicals-currently from
small, outdated facilities-will have to be expanded to
keep pace with planned industrial growth. This will
require modern technologies, such as ion exchange
processes for chlorine and caustic soda. These sub-
stances now are produced with 1960s technologies.
Technology absorption problems, raw material short-
ages (particularly petroleum because of competing
fuel demands), and infrastructural weaknesses will
continue to plague these plans.
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Metallurgy
The Chinese have continued to increase the quantity
and quality of a wide range of steels-including
carbon steel, high-strength steels, tool steel, spring
steel, and some stainless steels. They cannot produce,
however, the quantity, variety, and in some cases,
quality of steels to meet their needs. The most critical
technical shortcomings in the metallurgical industry
are in the manufacturing process, including poor
quality control, limited standardization, and insuffi-
cient instrumentation. Electric power shortages also
have prevented some plants from effectively using
what modern manufacturing equipment they have,
such as induction furnaces, electroslag refining cells,
and electron beam welding
The Chinese have had several significant technologi-
cal successes in metallurgy. They have acquired and
employed important ablative graphite composite tech-
nology with critical applications in the manufacture of
missile reentry vehicles. This technology is applicable
to rocket motor cases, certain wing panels, and other
components for fighter aircraft structures. Another
significant achievement is the application of ceramic
coatings for improving heat resistance of metal com-
ponents in gas turbines: the Chinese have used the
ceramic coatings as the matrix for a filamentary
composite by the inclusion of quartz fibers or metal
screens.
To upgrade the quality and quantity of their steels
and to learn advanced Western steel technology, the
Chinese contracted with the West Germans and
Japanese in the mid-1970s to build the Wuhan steel
plant and in 1978, for a large steel complex at
Baoshan. Technical bottlenecks, lack of sufficient
electricity, and funding problems have slowed prog-
ress of these projects.
Consistent with their policy of gaining self-sufficiency
and faced with a scarcity of chromium, the Chinese
have developed on their own a steel alloy of tungsten,
silicon, and manganese for use in bearings. The alloy
is good quality, but it is not equal to American state-
of-the-art chromium alloys because Chinese process-
ing techniques are inferior to those in the West. To
counter a similar lack of nickel, the Chinese have
developed nonnickel steels. Although they have fabri-
cated refractory metals, available evidence indicates
the quality is not up to that of advanced, industrial-
ized nations. The Chinese have concentrated on mo-
lybdenum alloy development, because they probably
are following early Soviet developments and because
molybdenum is plentiful in China.
Before economic readjustment slowed their negotia-
tions, the Chinese had expressed interest in obtaining
foreign facilities to process aluminum, aluminum
powder, cobalt, duralumin, magnesium, nickel, tung-
sten, and titanium. That they used these technologies
to develop modern weapons has been readily acknowl-
edged by the Chinese: aluminum for aircraft and
missiles, aluminum powder for solid-propellant mis-
siles, cobalt for jet engine manufacture, duralumin for
airframes, magnesium for aircraft components, nickel
for aircraft engine alloys, tungsten for armor piercing
shells, and titanium for high-temperature airframes
and engine shrouds, as well as the electroslag techno-
logy for armor plate. Assuming that they will contin-
ue to acquire foreign technologies, we anticipate that
the Chinese first will pursue the technologies for dual-
use systems and tactical weapons. In weapons devel-
opment programs, China seems to be committed to
completing existing strategic programs and to deve-
loping replacements for obsolete conventional wea-
pons systems.
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China is working to develop further its ceramics
technologies for commercial and military applica-
tions. Chinese laboratories have successfully manu-
factured cubic boron nitride, a ceramic material used
for cutting tools; the Chinese should be able to
produce enough of this material to supply cutting tool
producers within their machine tool industry. Another
significant advance was the laboratory-scale fabrica-
tion in 1979 of silicon nitride for use as wear- and
corrosion-resistant coatings for gas turbines.
The Chinese also are actively pursuing many research
efforts in composite materials development. The bulk
of that research, however, is devoted to the simplest of
the three types-filamentary composites. Serious re-
search on sandwich and multilayer composites is
being deferred for the present. The Chinese can
produce some of the high-purity metals required for
the matrix part of various filamentary composites, but
only on a small scale in the laboratory; the Chinese
encounter quality control problems when they try to
produce some of the high-performance metal matrix
materials on an industrial scale. One problem, for
example, occurs in the production of cast-steel super-
alloy matrix materials; the thermal resistance and
stress properties of these materials have been uneven.
The Chinese also have generally encountered prob-
lems in their attempts to produce the long fibers and
filaments used in filamentary composites. Although
they have made notable advances in creating some
laboratory specimens, they lack the expertise to man-
ufacture uniform, full-scale filaments. Because they
cannot produce some filaments on even a laboratory
scale, they are actively seeking foreign technologies to
manufacture aluminum, silicon, and carbon fibers.
Machine Tool Industry
The Chinese have developed a substantial machine
tool industry, capable of supplying China's low- and
medium-grade machine tool needs. China has ex-
ported some good-quality, durable, general-purpose
machine tools to southeast Asia. The Chinese are far
less capable, however, of making precision machine
tools and such things as miniature ball bearings and
the high-speed reduction gears required to produce
certain weapons. Levels of numerically controlled
machine tool technology are as much as 10 years
behind Western technology. Further, even if the
Chinese acquired advanced numerical control ma-
chine technology from abroad, problems would arise
from the impact on employment and from the uneven
technological match of the imported equipment with
the managerial system and the equipment already in
China's machine toolmakers have been handicapped
by deficiencies in design capability and lack of preci-
sion standards, as well as their lack of understanding
of automated production controls. Quality control
procedures are almost nonexistent. Computer-aided
design of parts, components, and assembled mecha-
nisms was virtually unknown until very recently.
Computer-aided manufacturing is only in an early
stage of development.
China's machine-building industry produces serial
items, using assimilated Western and Soviet technol-
ogies of the 1940s and 1950s, but it has not yet
absorbed the newer technologies-such as multiaxis
and numerically controlled machines-acquired
through one-of-a-kind or small lot purchases from
Japan and the West in the 1960s and early 1970s.
During the 1970s, the Chinese revealed some very
sophisticated Chinese-made machine tools, including
indigenous designs of numerically controlled systems,
using integrated circuits. These precision tools, how-
ever, are one-of-a-kind prototypes and are not ex-
pected to result in increased manufacturing capability
and capacity until the mid-to-late 1980s.
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equipment as five-axis machine tools, numerically
controlled milling machines, hot isostatic presses,
vacuum technology and equipment, and assembly line
equipment for airframe production. These acquisi-
tions, however, will have to be accompanied by im-
provements in management and production organiza-
tion before they have a maior impact on overall
productivity.
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Communications
General goals for telecommunications modernization
were set at China's second national conference of
postal and telecommunications departments in Au-
gust 1977: to implement modern telecommunications
service in each of China's more than 2,000 counties by
1980, to upgrade or to replace manual and semiauto-
matic step-by-step switching systems with automatic
electromechanical crossbar or all-electric switching
technologies by 1985, and to catch up with the state of
the art of the advanced world by the year 2000
The Chinese cannot meet these broad, vague, and
ambitious goals. Possibly by the year 2000 they will
be doing world state-of-the-art research in one or
more areas of telecommunications technology and will
have some services roughly equivalent to those in the
most advanced countries. But they will not achieve
world level across the board for all communications
technologies.
Efforts are being made in a wide range of communi-
cations areas-facsimile, color television, satellites,
fiber optics, computers, and data transmittal-down
to replacement of hand-cranked telephones and man-
ual switching with dial telephones and automatic
switching. But current levels of Chinese telecommuni-
cations technology, quantities of equipment, and
caliber of services are-at best-minimally adequate
to meet the needs of high-priority defense and the civil
government. For example, the complete conversion to
automatic switching in each of China's 2,000 counties
by 1985 is impossible because of the sheer magnitude
of the tasks. The Chinese now realize that their
original goals were too ambitious. Since the economic
adjustment process began in mid-1979, they have not
spoken of these objectives.
Direct broadcasting via satellite is an area in which
the Chinese could make significant advances by the
year 2000. The Chinese space program
is no more than 10
years behind Western communications satellites. The
characteristics of communications satellites-high
technology but low-volume production and testing
that can be done on the ground-mean that real
achievements can be made by a relatively small
number of experts, which is precisely the Chinese
The other areas in which the Chinese could achieve
their goals are fiber optics and facsimile technology.
The Chinese have great interest and need in these
areas and could make appreciable progress by the
year 2000, if investments in training and research
budgets are not cut back significantly
If the Chinese are to advance in their telecommunica-
tions technology, they must overcome some serious
problems. The most serious appear to be the lack of a
sufficient number of trained scientists and engineers
and the lack of an infrastructure that can provide test
and manufacturing equipment, mass production
facilities, and spare parts. The majority of China's
research and development facilities in telecommunica-
tions seem more like prototype laboratories than the
Western concept of research and development centers.
The Chinese facilities focus on producing new equip-
ment, but they also are forced to do most of the
ancillary development of machine tools, parts, and
test equipment. This detracts from the efficiency of
more advanced personnel and limits resources that
can be devoted to manufacturing the end product.
Further, the lack of more than rudimentary standards
and directions from centralized authorities and the
heavy dependence on local initiative and self-reliance
make the Chinese telecommunications network a
patchwork quilt of varying levels of technology. Se-
rious problems with the interconnectability of equip-
ment and the quality and reliability of the network
are inevitable and can be seen everywhere in China's
telecommunications systems.
Before economic readjustment halted negotiations,
the Chinese were looking abroad for technological
assistance. Between 1978 and 1979 China cooperated
with France and West Germany to receive training on
the Symphonie A satellite. The Chinese made no
purchase, however. Although the Chinese had dis-
cussed purchase of a US communications satellite,
they informed the United States in late 1980 that they
were postponing acquisition of a satellite. The Chinese
have sent many delegations abroad for international
meetings and factory tours associated with negotia-
tions for foreign equipment. In these negotiations, the
Chinese have strived to obtain maximum exposure to
advanced design and manufacturing technology, as
opposed to making outright equipment purchases.
situation
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Their efforts have focused mainly on the areas of
satellite communications and automatic switching
systems, both of which continue to be the highest
priorities, as the Chinese have excess microwave and
cable capacities.
Electronics
China lags 10 to 15 years behind the West in
computer technology and the manufacture of asso-
ciated semiconductor component technology (microe-
lectronics). The rate of progress in various aspects of
computer and semiconductor technologies has dif-
fered considerably, however. For example, Chinese
accomplishments in developing large-scale scientific
computers for scientific applications have been
impressive, while efforts in the development of soft-
ware and modern peripheral equipment for general-
purpose use remain at primitive levels. In semiconduc-
tor technology, laboratory research has yielded
impressive developments, but production yields of
standardized products have been very disappointing.
Aside from their late start in this rapidly evolving
industry, the Chinese have faced a number of techni-
cal and nontechnical obstacles. The very highly de-
centralized structure of the industry and the lack of
concern or understanding of the computer user are
probably the most important problems. The absence
of a supporting parts-and-materials infrastructure
creates important technical and manufacturing prob-
lems. The limited number of skilled personnel, espe-
cially technically oriented policy officials and middle
managers, is also a very serious problem.
The impact of computers on the broad range of
China's modernization goals is constrained, because
the Chinese application of computers is limited. Com-
puters are used in science and engineering in only a
relatively few, high-priority cases-for example, a
railroad, a steel mill, or a power grid. To make a real
contribution to modernization, computers will have to
be put into general use for planning, coordinating, and
evaluating in areas such as agriculture, energy devel-
opment, manufacturing, and transportation.
For widespread application, computers must become
available in quantity and must be designed for general
use. Given the Chinese drive for self-sufficiency, this
will mean domestic mass production of computers (as
opposed to importation), for which production stand-
ards must be established. The Chinese have a pro-
gram to produce one series of general-purpose com-
puters, but they have not enforced equipment and
quality standards evenly. A lack of coordination and
control, moreover, will impede widespread use of this
or any other series of computers. We anticipate that it
will be at least 10 to 15 years before an indigenous
Chinese computer industry can begin to satisfy do-
mestic needs.
Microelectronics. The state of the art of microelec-
tronics technology in China lags that of the West by
more than 10 years. If volume production is taken into
account, the gap is even wider. Most Chinese inte-
grated circuits-the primary components of most
electronic systems-produced in quantity are small-
and medium-scale bipolar and metal-oxide semicon-
ductor devices. These compare with models produced
in the United States in the 1960s. But the quality of
many of the Chinese components and in turn, their
reliability, are uneven. Probably the most sophisti-
cated device in production is a 256-bit random-access
memory circuit.
The Chinese have announced the development of
impressive one-of-a-kind devices on a laboratory basis:
for example, 1,000- and 4,000-bit semiconductor
memories and high-speed, bipolar memory devices of
256 bits. These devices, however, appear to be a long
way from volume production. The breadth of semi-
conductor research at universities and research insti-
tutes is impressive, but it provides very little assist-
ance in solving the major production problems facing
the Chinese semiconductor industry, because links are
still inadequate between university research efforts
and production-oriented organizations.
The Chinese are following the same basic path for
developing silicon integrated circuits as that of the
United States. They have the advantage, however, of
seeing which technologies are more viable in the West
and thus are able to emphasize the appropriate tech-
nologies more quickly. The Chinese are stepping up
their efforts to acquire Western semiconductor tech-
nology, specifically production equipment. But pro-
duction expertise-acquired through purchase of
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complete production facilities and extended contact
with Western production operations and personnel-
will be needed to solve many processing problems
quickly
The major shortcomings of semiconductor processing
technology in China are (1) shortages of contemporary
fabrication equipment, (2) lack of modern production
facilities with necessary environmental control, and
(3) inability to control process quality and to enforce
production standards. Chinese production suffers
from the very low yields of reliable devices and the
wide variations in device characteristics. The major
cause of low yield is contamination of devices during
manufacture by environmental impurities and han-
dling. These problems can be resolved only through
the installation of better clean-room facilities and
strict adherence to clean-room production practices.
As the Chinese attempt higher device complexities,
these problems will multiply if they are not corrected.
Processing control, through a thorough understanding
of processing phenomena and causes of defects, is
necessary to produce semiconductor devices of good,
uniform quality. To a large extent, this understanding
can come with experience, but good production prac-
tices and understanding first must be transferred to
the many plants producing semiconductors. Enforcing
device standards and monitoring production opera-
tions are important means for stimulating this trans-
fer of expertise
Whether the Chinese can move to higher levels of
integration in semiconductor devices will depend di-
rectly upon Chinese abilities to solve these production
problems. In addition, more advanced processes for
design, fabrication, and testing of devices will have to
be developed or acquired if the Chinese are to manu-
facture medium- and large-scale integrated circuits
successfully. Although the Chinese have already
shown strong interest in computer-aided design and
automated testing technology, these areas probably
will not be critical until the Chinese reach large-scale-
integration levels of density. Efforts are already under
way to develop capabilities in advanced technologies
of lithography, ion implantation, and other processing
that will become important in the future. In the near
term, however, improvement of existing production
processes and equipment is the most pressing priority
in Chinese microelectronics technology
Computer Technology. The compok_ter situation is
much the same as that of the United States in the
1950s-a small installed base of a few thousand
machines: predominantly digital computers, but with
a high percentage of analog and hybrid computers
performing vital functions, a large variety of com-
puters that are not generally compatible (no one
model having been made in quantity). The focus is on
applications in scientific and industrial control rather
than in business. Because the leading specialists in the
computer field in China are academic-not indus-
trial-personnel, they are more interested in the
technology than in the manufacturability, quality,
and usability of computer products.
The Chinese have a firm understanding of the funda-
mentals of computer hardware design and are knowl-
edgeable about most of the latest Western design
innovations. They have shown strong capabilities in
fairly sophisticated adaptations of Western designs,
choosing features that best meet Chinese needs and
making modifications to compensate for limitations in
their electronic component technology. The Chinese
do not always make the correct design choice, how-
ever, to meet application needs of users or to develop a
computer that can be easily manufactured in quan-
tity. For example, we believe that a high percentage of
the new machines developed by CAS institutes do not
meet these two requirements and thus are not put into
production.
The Chinese apparently do not have a strong funda-
mental capability in software design, particularly in
areas important for developing large operating sys-
tems. While they have made respectable accomplish-
ments in developing compilers for several high-level
programing languages, their progress in understand-
ing concepts important in the design of complex
software systems is very limited. This is due partly to
their limited base of software specialists and their
historically narrow focus on scientific and engineering
applications, involving highly trained computer
professionals, knowledgeable in machine or assembly-
language programing. Only a conscious shift to
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general-purpose computing with a commitment of
significant resources to software development and
manufacture of electromechanical equipment will im-
prove this situation. Still to emerge is an emphasis on
the widespread use of general-purpose computers,
programed and operated by large numbers of users
with little formal computer training.
Only within the last few years have the Chinese had a
program to produce a series of compatible computers
of varying size, with interchangeable components, to
serve a wide variety of general-purpose users. The
DJS-200 computer series, patterned after the IBM
360 series, is a major step in this direction. But
Chinese attempts to build DJS-200 computers at
different locations, using locally available parts and
materials, probably will lead to serious variations in
product quality and major problems of compatibility,
even among the same models within the series,
The Chinese computer designers intend to replace the
200 series with a new general-purpose computer
series, the DJS-300, which will be compatible with
Western computer systems and equipment. Its devel-
opment, however, will be influenced by some of the
same problems that have affected other Chinese
computer development programs.
A State Administration of Computer Industry has
been formed to enforce conformity with equipment-
interface standards, to develop important operating
systems software, and to provide nationwide customer
support. So far, this organization has had only limited
success. Failure to meet such responsibilities will
greatly reduce and delay effective and widespread use
of the DJS-200 or any other series of computers.
In addition to lagging the West in developing stand-
alone computer products, China has very little expe-
rience in the use or design of complex systems involv-
ing multiple, interconnected computers or major
computer centers with a large assortment of remote
terminals and mass storage. Modest development
efforts have been under way in building time-shared
systems, but the Chinese lack the expertise required
for integrating facilities, equipment, communications,
and systems. The same deficiencies exist in software
and peripherals, and understanding users' needs.
Visitors to China often are impressed by the diversity
of advanced research projects and by the up-to-date
technical awareness of Chinese computer scientists,
whose research efforts in the most advanced areas of
computer technology give the impression that the
Chinese are further ahead than they actually are. In
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made any real impact on computer use, because the M
concepts are too advanced to be applied
Surrounded by a vast amount of Western technology
and expertise, the Chinese have made gallant efforts
to adapt or to reverse-engineer Western products and
designs. For example, some series of minicomputers
for specific functions are patterned after exploited US
minicomputers, specifically US Data General Nova
models. A large-scale, general-purpose computer was
designed in China, based on early design and other
engineering documentation in Western open litera- 25X1
ture. Even when the Chinese successfully adapt West-
ern computer design concepts, however, we doubt that
the Chinese understand why or how such designs were
created. To understand user requirements and to
design a highly serviceable product of adequate man-
ufacturability cannot be learned from merely reverse-
engineering of foreign manufactured equipment; di-
rect involvement in the design process is required.
Space 0
Since its space program began in the late 1950s, 25X1
China has orbited eight satellites, the first in 1970,
Formed in 1968, the Chinese Academy of Space E
Technology in the Seventh Ministry of Machine
Building is responsible for developing and producing 25X1
satellites and space launch vehicles. In addition to
launch facilities, the Chinese have constructed a
large, space-tracking network with sites throughout
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Satellites. China made impressive progress early in
its space program, apparently because of the high
priority placed on the role of space during the mid-
1970s when the development of military intelligence
satellites was emphasized. The general problems of
mass production that commonly plague most other
Chinese industries are not a factor in the space
program, because most related items are custom made
in very limited quantities. Recently, however, the
space program appears to have been delayed, possibly
because of a combination of funding, bureaucratic,
and technical problems.
Most Chinese space technologies are not state of the
art but appear adequate for present needs. We expect
the space program to improve with China's exposure
to more advanced foreign technologies. We do not
expect technological levels and assimilation of more
sophisticated skills to pose the greatest obstacles-at
least in the near term. We see lack of understanding
of the concepts of systems and subsystems reliability,
lack of rigorous quality control, and poor systems
integration and program management as the major
obstacles to the Chinese space program
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China also has a strong interest in earth resources
satellites. A domestically built satellite is under devel-
opment, but in the meantime, the imagery from US
Landsats is being used in a variety of programs. To
facilitate receipt of Landsat-produced data, the Chi-
nese have negotiated for several years to buy a
Landsat ground station. This purchase has been de-
layed for financial and technical reasons. The Chinese
have expressed a desire to separate the receiving
portion of the station from the data processing section.
This would not only increase the price of the station,
but because the separation would entail additional
strategic technology, the sale would require further
review by COCOM, a coordinating committee of
representatives from NATO countries.
China's planned domestic program will provide a
modest experimental satellite communications system
but not the fully operational system desired. To
achieve this and to speed up progress in their own
space program, the Chinese negotiated for the pur-
chase of direct-broadcast satellites from the United
States or Europe, hoping to absorb as much satellite
technology as possible. Early in 1981, however, the
Chinese officially informed the United States that the
purchase would have to be delayed for several years
due to lack of funds. In the meantime, China appar-
ently plans to improve its domestic communications
by leasing channels on Intelsat satellites, which China
has used for international communications for several
years.
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Appendix
The Structure and Operation
of China's S&T System
The Chinese leadership has attempted to revitalize
and to strengthen the organizations responsible for
managing S&T policy and for conducting R&D activ-
ities. Scientists and technical personnel have been
given a large voice in policymaking. The functioning
of China's S&T system, however, has been plagued by
organizational and political problems, some of which
stem from the continued aftereffects of the Cultural
Revolution, but most of which have been characteris-
tic of complex organizations in China. The cumber-
some bureaucratic apparatus for handling S&T af-
fairs has been beset by coordination problems at both
the administrative and working levels.
The prerequisites for S&T modernization, therefore,
have included not only a need to elevate the status of
S&T in China but also to confront the large number
of inefficiencies within the S&T sector that limit
sustained productivity. Initial indications are that
economic benefits have been marginal, and numerous
bureaucratic obstacles still restrict the development of
an effective, indigenous S&T system.
Research in China is conducted within three main
institutional structures: the CAS, the various indus-
trial and machine-building ministries, and the univer-
sity system. In addition, there is a defense-related
research system, which often penetrates the civilian
research structure. Most basic scientific research is
conducted within the institutes of the academy, while
most applied research is carried out in ministry
institutes. Some research is also conducted in Chinese
universities, although their primary function is educa-
tion. The research activities of these three structures
are monitored and integrated by national S&T com-
missions.
Chinese S&T Commissions
Two national commissions are responsible for oversee-
ing S&T activities in China. The SSTC coordinates
and administers civilian-related S&T programs. The
National Defense Science and Technology Commis-
sion (NDSTC) has primary responsibility for adminis-
tering S&T policy for defense-related S&T projects.
Established in 1958, the SSTC was disbanded during
the Cultural Revolution. Its reestablishment in
1977-78 with associated provincial committees re-
flected China's increased emphasis on the role of
science, as well as an effort to upgrade the status and
to expand the role of experts in the formulation of
S&T policies at both the national and provincial
levels.
As currently organized, the state commission reports
directly to the State Council, which ultimately con-
trols the commission budget and has final approval
over all major commission-endorsed projects. Accord-
ing to pronouncements by the Chinese political and
scientific leadership, the commission has been dele-
gated a key policymaking responsibility. Its present
role in policy formulation probably is much more
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limited, however, than these statements indicate. In 25X1
general, we believe, the main function of the commis-
sion is to give coherence and to foster cooperation in
the implementation of national policy for science and
technology.
The SSTC has five bureaus, each with a specific
function. The first bureau makes plans for overall
research efforts, while the second bureau has respon-
sibility for projects in energy, resources, and materi-
als. The third bureau oversees S&T activities related
to transportation, communications, industry, and the
development of new technologies. The fourth handles
agriculture, health, and light industry, and the fifth is
responsible for developing nuclear energy. An admin- 25X1
istrative office supports China's international S&T
relationships and facilitates coordination and com-
munication among S&T groups in China. In each
province, an S&T committee coordinates provincial
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The primary concern of the SSTC is research for
civilian applications. A major responsibility is seeing
that research results are distributed to production
units and coordinating projects that cut across the
various production ministries. Each SSTC bureau has
members from universities, the CAS, and the indus-
trial and machine-building ministries. An example of
the broad SSTC involvement in both research and
development was a conference the commission called
recently to speed up the development and manufac-
ture of large-scale-integration (LSI) computer com-
ponents in China. The conference was attended by
academicians, technicians, engineers, and scientists
representing research institutes, ministerial produc-
tion units, and machine-building ministries.
The SSTC also is responsible for helping to support
Chinese contacts with foreign scientists and S&T
organizations. Commission policy encourages and fa-
cilitates scientific collaboration with other nations in
support of national development.
The NDSTC is the chief coordinating body for
defense-related S&T activities. In contrast to the
SSTC, the NDSTC appears to have a direct control
over many of the institutes and factories with which it
carries out its mandate. It also appears to be much
more authoritative .than the SSTC and apparently is
involved in the technical aspects as well as the
administrative side of research. The NDSTC has
greater discretionary control over funding and a
higher priority to utilize nondefense organizations and
personnel for cooperation on specific projects. It may
directly task any university laboratory or industrial
ministry, including those outside its direct administra-
tive control. (Note: The SSTC does not appear to have
the ability to task NDSTC institutes, although it may
request assistance on certain occasions.) The NDSTC
also has a much larger budget than the SSTC and
seems to have first priority when new graduates are
assigned and new equipment is allocated. Some at-
tempt has been made to bring all S&T research,
civilian and defense, under the control of the SSTC,
but the degree to which this has been successful
remains unclear. Although the NDSTC clearly plays
a major role in China's S&T system, the full extent of
its capabilities remains vague, due apparently to
Chinese efforts to disguise defense-related research
Chinese Academy of Science
The CAS, headquartered in Beijing, is the most
prestigious Chinese scientific organization and the
central institution in China responsible for carrying
out basic S&T research. Although the CAS is sup-
posed to report to the SSTC, it has become semi-
autonomous in many respects and often reports direct-
ly to the State Council. Its growing influence derives
from the fact that most of China's best S&T personnel
work within institutes of the science academy.' In
addition, the science academy has sole responsibility
for the administration and functioning of all its own
research institutes and facilities.
The CAS has five major departments: (1) mathe-
matics and physics, (2) chemistry, (3) biosciences,
(4) geosciences, and (5) technical sciences. Decision-
making authority is centered in the presidium of the
scientific council of the academy. The presidium is
composed of 29 members; two-thirds are members of
the academy, and one-third are representatives of
other government and party institutions. The presid-
ium elects the president and vice president of the
academy. The CAS has approximately 117 research
institutes scattered under the control of 11 branch
academies in the cities of Shanghai, Hefei, Chengdu,
Kanjing, Kumming, Guangzhou, Shenyang, Wuhan,
Lanzhou, Xingiang, and Xian. The institutes are
oriented mainly toward research in basic and theoreti-
cal sciences. The CAS also plays a role in S&T
training and education, because it holds responsibili-
ties for the administration of four S&T universities-
from the view of Western observers.
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The Chinese Machine-Building
and Industrial Ministries
Machine-Building Areas of S&T Responsibility
Ministries
Civilian products (for example, machinery,
metals, light industrial equipment)
Second Nuclear energy and weapons
Third Aerodynamic systems
Fourth Electronics and computers
Fifth Conventional weapons and munitions
Sixth Shipbuilding
Seventh Ballistic missiles/space
Eighth Tactical cruise missiles
Selected Industrial Ministries
Ministry of Chemical Industry
Ministry of Coal Industry
Ministry of Light Industry
Ministry of Metallurgical Industry
Ministry of Petroleum Industry
Ministry of Textile Industry
Industrial and Machine-Building Ministries
The second major organizational sector for S&T
research in China includes the industrial and
machine-building ministries, a number of which have
S&T departments at the national level. Most have one
or more research institutes that, in turn, supervise
varying numbers of research components. Also under
the ministries are production facilities, some of which
have their own research facilities.
Ministerial research institutes mainly conduct applied
research that tends to be closely related to production
goals at the national level. S&T activities within this
sector and budgetary allocations for research gen-
erally fall under the jurisdiction of the individual
ministries. Depending upon the scope of a project or
its civilian/ military orientation, the two commis-
sions-the NDSTC and the SSTC-have the author-
ity to task the various ministries
Universities
A third source of S&T research in China is its
universities. The CAS, the industrial and machine-
building ministries, and the Ministry of Education all
have universities that they control and fund. Both
basic and applied research are done at the universi-
ties; as expected, those with close ties to industrial
ministries focus on applied research, while the science
academy universities emphasize basic research. All
these universities also may do research in industrial or
defense-related fields. Efforts are under way to ex-
pand significantly the research function of Chinese
universities. Among the leading universities with
strong S&T programs are Qinghua, Fudan, and Beij-
ing; these are administered by the Mnstof Educa-
tion.
ministerial universities also are responsible for train- 25X1
The CAS universities have already been noted. Exam-
ples of ministry universities are the 10 controlled by
the Ministry of Metallurgical Industry; these are
specifically oriented toward metallurgical studies and
research. The Third Machine-Building Ministry con-
trols the Northwestern Technical University in Xian,
which specializes in aeronautical engineering. These
ing S&T personnel for their parent ministries. Other
universities are run entirely by the Ministry of Educa-
tion or jointly by the ministry and the industrial or
machine-building industry
Planning
First announced in 1978 by the central political
leadership, the Chinese National Science Plan was
based upon the recommendations and advice of lead-
ing scientists throughout China. During the current
readjustment program, it has undergone major review 25X1
and revision as a result of shifting priorities and the
party leadership's better recognition of immediate
needs. The major emphasis now is on applied research
and the direct contributions that S&T can make to
the modernization program.
The Chinese National Science Plan provides guide-
lines for determining the priorities of S&T activities.
It outlines basic objectives for the development of
specific research plans by each research institution. 25X1
Based upon these objectives, every research depart-
ment within each CAS institute, for example, annu-
ally reviews its accomplishments of the previous year,
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surveys the progress of continuing programs, exam-
ines proposals for each new research project, and then
composes a departmental plan for the following year.
The managerial staff of the research institute-with
the advice of an academic committee of outside
experts and some of its own scientists-reviews the
departmental plans and proposes an institute-wide
plan. A CAS committee of senior managers reviews
these institute plans and, theoretically at least, for-
wards a proposed plan for the entire academy through
the state S&T commission to the state council.
New S&T projects within Chinese research institutes
may be proposed by individual scientists or techni-
cians or by industrial managers. A good deal of input
appears to come from below. Once a national research
program is completed, the staff of the SSTC identifies
gaps and recommends specific institutes to conduct
research to fill these gaps. Guidance could concern
research given a high priority in the national plan but
not fully covered in institute plans, or it could provide
for further development of prototypes and products
that are not quite ready for mass production
Initial plans for reform of the S&T system were
aimed at decentralizing decisionmaking and increas-
ing the autonomy of each operating unit, but these
plans have been postponed as readjustment has neces-
sitated greater central control to advance the economy
and S&T system. For S&T, this has meant a more
careful monitoring of all related activities and greater
attention to the ways in which research can make a
contribution to the modernization program. At the
same time, scientists have been given an increased
role in policy formulation to assess proposed projects
or foreign technology purchases for technical and
economic feasibility. The emergence of "techno-
economics" as a growing field of study in China
reflects the awareness of the leadership to further
minimize waste and to ensure optimal use of scarce
S&T resources.
In theory, research organizations submit yearly re-
search proposals and plans to the State S&T Commis-
sion, which then reviews and balances the requests in
accordance with annual and longer range plans. The
CAS is an exception. It has enormous prestige and a
much longer institutional history than the SSTC.
Prior to formation of the commission and its predeces-
sor, the science academy was responsible for all
national S&T planning. The CAS apparently submits
its research plans directly to the State Ccouncil for
approval, without going through the State S&T Com-
mission, except for obtaining tacit approval. This
bypass was facilitated by Vice Premier Fang Yi: he is
Minister in Charge of State S&T Commission and
until May 1981 was president of the science academy.
His coinciding appointments may have been designed
to alleviate potential problems with coordination and
competition between the two organizations. Further,
the State Council, not the SSTC, approves the open-
ing of new academy branch institutes and approves
new members elected to the academy. Most recently,
the freedom of the CAS to follow an independent line
of action may be more limited due to the closer
monitoring of S&T activities by the SSTC and eco-
nomic officials.
When different institutes propose similar projects, the
CAS (if the competing proposals are presented by
different science academy institutes) or the SSTC (if
the competing proposals are developed by ministerial
institutes) is responsible for assigning the project to
the appropriate institute. Such decisions usually are
based on the scientific record and geographical loca-
tion of the institutes, the relative costs of the propos-
als, and the completion schedule proposed. Although
research historically has been concentrated in Beijing
and Shanghai, and institutes in the two cities general-
ly have had better facilities and more competent
personnel, an attempt has been made recently to
disperse research funds and to strengthen local S&T
capabilities throughout other areas.
The locus of decisionmaking generally varies with the
priority and level of funding required for a particular
project. For example, construction of the recently
postponed Beijing proton synchroton project entailed
the participation of more than 10 ministries, commis-
sions, and other units, as well as more than 100
factories. The entire project had an estimated price
tag of US $500 million. It received authorization from
the Politburo and the State Council, and was ap-
proved directly by Deng Xiaoping.
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On the other hand, CAS institutes, military institutes,
and universities all have some discretionary funds that
they can dispense without higher authorization. Deci-
sions on institutional support and funding for small
projects often are based upon the guidance and advice
of participants from the lower levels of these organiza-
tions. In addition, each Vice Premier at the State
Council reportedly controls his own scientific research
funds and can allocate them as desired without any
other approval. Within the Chinese S&T system,
organizations that have control over funding tend to
have control over the assignment of S&T priorities
and R&D activities.
Coordination
A major function of the SSTC is coordinating re-
search efforts between the ministerial and CAS insti-
tutes. In addition to eliminating duplication of pro-
jects, this function involves encouraging cooperation
among institutes, stimulating the flow of S&T infor-
mation from abroad to relevant institutes, and ensur-
ing that new processes and inventions are available to
potential users. The goal of all these activities is
effectively and efficiently translating research devel-
opments into production results.
The Chinese S&T system frequently is plagued by a
lack of coordination between research institutes, lack
of communications between scientists, duplication of
research efforts, and only limited interactions between
research institutes and factories. End-user involve-
ment in the choice of S&T projects and in the
evaluation of R&D results is often conspicuously
absent. Chinese R&D efforts tend to be highly com-
partmentalized. As a result, little communication and
interaction take place among the science academies,
the ministries, and the university research groups, or
even among parts of the same organizations. One
result is that the way the system will function or how
innovations will develop and spread cannot always be
logically predicted
The SSTC was reestablished to alleviate such prob-
lems. A closer look at recent examples of R&D
projects in progress or completed reveals that individ-
uals and groups from diverse organizations have
begun to work together to improve the quality of
technology and related products. CAS research insti-
organizations and production units.
tutes have worked with universities and factories
under the Ministry of Education to develop products.
The military has become increasingly associated with
academy institutes to conduct applied research in
several areas. In a growing number of cases, ministe-
rial research institutes and universities are working
closely with factories to solve manufacturing problems
or to develop new products; ministries are selecting
CAS research developments to put into production;
and the science academy is selling its research designs
directly to factories on a contract basis. In short,
stronger connections are being established among
elements within the S&T system and between S&T
The Chinese bureaucracy, however, remains cumber-
some, and the S&T system frequently falls victim to
an overburdensome bureaucracy. The chain of com-
mand in the research structure tends to be painfully
slow and tedious, and formal communications
between structures still appear to have problems.
Through a variety of personal ties and informal
channels, Chinese scientists manage to link an assort-
ment of organizations drawn from any of the three
research structures, the military, or the factories into
working units on specific projects. How widespread
and how often this practice occurs, how long it takes,
and the percentage of time such linking can be done
successfully remain open to question. Because of this
uncertainty, managers in production enterprises have
difficulty in incorporating technology developments
into their planning strategy
Despite recent improvements, such as the emergence
of various organizations responsible for the collection
and dissemination of scientific information, links
among components of the S&T system for diffusing
technical information remain weak or do not exist.
Western scientists frequently have reported that
scientists in one region were duplicating research
efforts being carried out in another area. Foreigners
often have been the first to tell Chinese scientists
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This acknowledged unevenness in coordination and
cooperation appears to result from several factors.
The narrow professional training of the scientists
educated in the Soviet Union during the 1950s or in
China itself since 1949 makes it difficult for scientists
even in related fields to communicate with one an-
other. Moreover, scientists working on defense-related
items often are segregated from those working on
civilian projects; they are admonished not to discuss
their work with other scientists. Geographical factors
also enter into the picture. Substantial distances
between urban areas and the lack of adequate and
rapid communication links limit cooperation among
scientists.
Many research institutes may be apprehensive about
volunteering the services of their personnel in cooper-
ative projects for fear that the personnel might not
return. Securing a qualified replacement is difficult,
particularly if the research institute is not in a major
urban area.
Frequently, organizational and personal relationships
have resulted in animosity and competition. Because
of the paucity of equipment, personnel, and funding,
institutes tend to compete for resources rather than to
cooperate. This problem was exacerbated during the
initial period of decentralization in 1978-79, because
possession of specialized information and expertise
became a valuable technical resource with potential
financial rewards.
To counter some of these problems, the SSTC insti-
tuted several policies: Professional S&T associations
have been reestablished and charged with facilitating
communication among scientists and technicians
through national and local level conferences, and
publication and dissemination of professional jour-
nals. S&T associations have been encouraged to pro-
vide advice and guidance to research and production
units in their vicinity. The state commission has
actively encouraged greater interaction among S&T
personnel and has sponsored several national confer-
ences on particularly important topics. Although the
tangible benefits of these efforts remain limited, it is
too early to evaluate their long-term implications for
S&T modernization.
Supervision
The SSTC provides minimal supervision over the
actual research within both ministerial and CAS
institutes. The state commission has the authority,
however, to monitor the work of the institutes through
several mechanisms: periodic progress reports submit-
ted by the institutes on research projects and meetings
between institute personnel and commission officials
for planning purposes. The lack of technical expertise
among a sizable number of commission personnel and
the loyalty of commission scientific advisers to their
respective institutes probably impact upon the objec-
tivity and quality of commission reviews. In the long
run, an institute that fails to fulfill its annual plans
appears likely to have its share of research funds
reduced, particularly as the readjustment program
acquires momentum. The commission has been espe-
cially anxious to alleviate the frequent waste from
purchasing foreign technologies that later were under-
utilized due to a dearth of competent persons to use
the technology or a lack of understanding of mainte-
nance procedures. As a result, all proposals for major
purchases of foreign technology now must be reviewed
and approved by the central authorities in Beijing
responsible for foreign technology acquisition.
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