CHINA S MILITARY AND ECONOMIC PROGRAMS IN THE THIRD WORLD

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83B00851R000200160003-5
• Release Decision: RIPPUB
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• Document Page Count: 20
• Document Creation Date: December 21, 2016
• Document Release Date: January 15, 2008
• Sequence Number: 3
• Publication Date: October 1, 1982
• Content Type: REPORT

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Directorate of Secret
Intelligence
China's Military and
Economic Programs
in the Third World
DIA review completed.
Secret
GI.82-10210
October 1982
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Directorate of Secret
Intelligence
China's Military and
Economic Programs
in the Third World
International Security Issues
Division, Office of Global Issues. Comments and
queries are welcome and may be addressed to the Chief
Communist Activities Branch
This paper has been coordinated with the
Department of State, the Defense Intelligence Agency,
and the Agency for International Development.
Secret
GI 82-10210
October 1982
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Secret
Summary
Information available
as of 15 August 1982
was used in this report.
China's Military and
Economic Programs
in the Third WorldF
contracts with Iran and Libya.
China's activities in the Third World in 1981 reflected Beijing's 1979
decision to earn hard currency through its military and economic pro-
grams. For the first time in nearly 20 years, Beijing seems to have
abandoned its traditional arms giveaway program. China's military sales
soared to $2.8 billion in 1981, double the value of all military agreements
with non-Communist LDCs since the program began in 1958. Of this, Iraq
bought $2.2 billion worth of ground forces weapons, spare parts, and
ammunition for its war with Iran. Beijing also concluded its first military
number of clients by using non-Soviet-origin material
while it was at war and Libya's desire to conceal weapons transfers to a
Despite the surge in military sales, China made only small inroads into the
global arms market, which averages $30 billion annually for major weapon
systems and associated support. The dramatic growth in Chinese sales in
1981 probably was due more to short-term, unusual market conditions than
to an increase in Chinese competitive strength. In particular, China
responded to opportunities presented by Moscow's refusal to resupply Iraq
China's economic aid effort-traditionally one of the most concessionary 25X1
programs in the world-in 1981 sank to a 12-year low of $77 million
because of competing economic priorities at home. China also has become
somewhat disillusioned over LDC mismanagement of aid projects, such as
the Tan-Zam Railroad. Rather than providing new concessionary aid,
stable and predictable flow of orders.
We do not expect Chinese military sales to maintain the record level of
1981. China could, however, improve its longer term sales prospects by
aggressively marketing more competitive weapon systems, such as its
MIG-21-based fighter and improved medium tank. Weapons such as these
would appeal to a wider group of customers and could result in a more
iii Secret
G182-10210
October 1982
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Over the next year or so, foreign economic aid to LDCs almost certainly
will remain low by historical standards, and additional effort will be placed
on increasing hard currency earnings. In this regard, China will probably
be able to expand its program to supply technical services to contractors
abroad since its salary rates-from $400 a month for laborers to $2,000 for
project managers-are highly competitive.
The data on economic and military agreements reflect the latest informa-
tion and supersede data in our previous publications
The term less developed countries includes: all countries of Africa except
the Republic of South Africa; all countries of East Asia except Hong Kong
and Japan; Malta, Portugal, and Spain in Europe; all countries in Latin
America except Cuba; and all countries in the Middle East and South Asia
except Israel. Cambodia, Laos, and Vietnam, which became Communist in
1975, are reported on for prior years for historical reasons.
Within the aid context, the terms extensions, commitments, and agree-
ments refer to pledges of goods and services, either on deferred payment
terms or as grants. Assistance is considered to have been extended when
accords are initialed and constitute a formal declaration of intent. For
economic aid, credits with repayment terms of five years or more are
included. Where terms are known, the credits are designated as "trade
credits" if amortization is less than 10 years. For military transactions, all
sales are included-whether for cash or provided under credits or grants.
The terms drawings and disbursements refer to the delivery of goods or the
use of services.
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Commercialization of the Military Program
3
1.
Military Aid to LDCs
2
2.
Military Agreements With LDCs, 1981
4
3.
Military Aid to LDCs, by Year
4
4.
Military Technicians in LDCs, 1981
5
8.
Economic Aid Credits and Grants to LDCs, 1956-81
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N-h
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China: Military and Economic Agreements with LDCs
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1 ~ 7
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China's Military and
Economic Programs
in the Third World'
After decades of generally low profile aid in the Third
World, Beijing began in earnest in 1980 to expand
hard currency earnings through its military and eco-
nomic programs. In 1981 Chinese military agree-
ments soared to $2.8 billion from an annual average
of $60 million in 1958-80 as Beijing moved quickly to
close deals with hard currency customers. In this
single year Iraq became China's most important arms
buyer, nearly tripling military orders placed by Paki-
stan. Beijing's willingness to sell weapons to both Iran
and Iraq underscored China's serious intent to pursue
a vigorous commercial arms export policy
Economic aid commitments, tra 1-
tionally China's major instrument of influence in the
Third World, sank to a meager $77 million.
Arms Exports Before 1980
China made occasional arms transfers to Third World
countries in the late 1950s and early 1960s, but did
not provide arms as a regular feature of assistance
until 1965. Its support for Pakistan when the United
States and the United Kingdom cut off deliveries
during the Indo-Pakistani war made China the suppli-
er to whom Islamabad subsequently turned for rapid
delivery during crises. As a result, Pakistan's orders
accounted for more than one-half of China's $1.4
billion of military aid commitments to LDCs in 1958-
80 (figure 1). Another 10 percent ($125 million) went
to Egypt to fill equipment and spare parts gaps after
the withdrawal of Soviet aid in the mid-1970s. Most
of the remainder went to 25 sub-Saharan countries-
the largest share to Tanzania for developing that
country's national forces.
Figure 1
China: Military Aid to LDCs by Major
Recipient, 1958-81
East Asia 61
North Africa 349
Sub-Saharan Africa 422
South Asia 915
China's small program never competed seriously with
Soviet or Western suppliers, except in Pakistan and
Tanzania, before 1978. For the most part, China
provided small quantities of outmoded aircraft,
ground forces equipment, small arms, and ammuni-
tion to the poorer less developed Third World nations
(see table 1). 25X1
An important break in marketing patterns came in
1978, when China concluded a $90 million plus deal
with Egypt for F-6 (MIG-19) fighters and spare parts
for Soviet equipment as part of a new effort to assist
countries that had broken ties with the USSR. The
ability to service some of Cairo's Soviet equipment
25X1
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Table 1
Military Aid to LDCs a
12 12 Field guns, infantry weapons, and radio equipment
1 1 Tanks, infantry weapons, and ammunition
Burundi 2 2 Infantry weapons, ammunition, radio equipment, and trucks
Cameroon 7 7 Two fast patrol boats, field guns, small arms, and ammunition
Central African Republic 5 5 500 trucks and other unidentified equipment
Congo 10 10 Type-62 tanks, field guns, infantry weapons, three helicopters, 10
naval craft, and support equipment
Equatorial Guinea NEGL NEGL Unidentified ground forces equipment
Ethiopia 3 3 Small arms and ammunition
The Gambia 3 3 Small arms and radio equipment
Ghana 1 1 Small arms
Guinea 8 8 Two helicopters, four patrol craft, tanks, field guns, small arms,
ammunition, and vehicles
Madagascar 2 2 Air defense guns, small arms, and ammunition
Mali 4 4 Five helicopters, Type-62 tanks, small arms, and military
construction
Mozambique 5 5 Air defense guns, small arms, and trucks
Rwanda 8 7 Artillery, small arms, and vehicles
Seychelles 1 1 Small arms, vehicles, and communications equipment
Sierra Leone 3 3 Two patrol craft and small arms
Somalia 41 34 Fighter aircraft, infantry weapons, ammunition, spare parts, and
trucks
Sudan 95 28 F-5 and F-6 fighter aircraft, tanks, infantry weapons, and signal
equipment
Tanzania 118 96 Fighter and trainer aircraft, patrol craft, APCs, field guns, infantry
weapons, and trucks
Togo 1 1 Infantry weapons and radio equipment
Tunisia 31 20 Two patrol craft, air defense guns, tanks, and infantry weapons
Uganda NEGL NEGL Field guns and infantry weapons
Zaire 50 32 Four patrol craft, tanks, field guns, infantry weapons, vehicles, and
spare parts
Zambia 32 31 Fighter aircraft, air defense guns, infantry weapons, and military
construction
15 15 Field guns, infantry weapons, ammunition, and spare parts
2
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Indonesia
37
21
Egypt
125
118
Iran
36
NA
Iraq
2,210
274
Syria
30
2
South Asia
915
798
Bangladesh
44
36
Pakistan
844
735
Note: Ellipsis indicates no known deliveries; NEGL refers to less
than $500,000; NA indicates that value is not known.
a Including all validated military agreements for military supplies
provided for cash, under credit arrangements, or as grant aid. Values
of military agreements are based on export prices charged LDCs.
b Before Communist takeover, April 1975.
Fighter and bomber aircraft, air defense guns, infantry weapons, and
radars
F-6 fighter aircraft, field guns, air defense guns, and vehicles
Field guns, antiaircraft guns, ammunition, and quartermaster
supplies
Unidentified ground equipment
Fighter and trainer aircraft, tanks, naval craft, and an ordnance
plant
Fighter, bomber, and trainer aircraft, naval craft, tanks, artillery,
infantry weapons, vehicles, and support
pointed up the role China could assume in supplying
former Soviet clients. The size and character of the
sales to Egypt gave China credibility and access to a
lucrative market where it could act as an altern
commercial basis and replaces the longstanding grant
aid program to friendly governments that gave China
less than 1 percent of the LDC arms market and onl
ative limited economic and political returns.
capi-
supplier while gaining political leverage. Beijing
talized on this policy again in 1979 with nearly
million worth of deals with Somalia and Sudan.
Commercialization of the Military Program
Beijing's new arms sales policy is aimed at earning
hard currency by exploiting surplus production capa-
bilities. It puts Chinese arms exports largely on a
25X1
interests, however, will continue to be reflected in its
military program through offers of concessionary 25X1
prices and financing to politically favored Third
World customers.
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Table 2 Million US $ Table 3
Military Agreements With LDCs, 1981 Military Aid to LDCs, by Year
North Africa 305
Libya 305
Sub-Saharan Africa 44
Sudan 30
Tanzania
The 1981 surge in sales (tables 2 and 3), which greatly
exceeded the annual target of $1 billion set when
China first decided to enter the arms market, reflect-
ed Beijing's willingness and ability to take advantage
of special situations such as Moscow's refusal to
supply Iraq, and Libya's large purchases, F_
of charge.
The
arms-for-profit policy places the greatest emphasis on
hard currency earnings and relegates political consid-
erations and arms giveaway programs to a less impor-
tant role. For the first time in nearly 20 years, we did
not observe China agreeing to provide any arms free
parts, and ammunition-making up 80 percent of
China capitalized on sales prospects provided by the
USSR's embargo of weapons to Iraq. Baghdad, previ-
ously a small Chinese customer, bought $2.2 billion
worth of ground forces weapons, maintenance, spare
40 102
143 100
74 71
141
198
radar valued at $16 million, and Damascus bought
$28 million worth of unspecified materiel. Other
Chinese agreements were mainly with established
clients:
? Pakistan, China's biggest customer before 1981 and
an ally whose security is of vital interest to China,
signed accords totaling about $130 million, mainly
for 40 A-5 fighter aircraft and ground forces equip-
ment, according to the international press.
? Sudan concluded a $30 million deal in late 1981 for
F-6 (MIG-19) aircraft, tanks, field artillery, and
other ground forces equipment despite China's un-
happiness over Khartoum's failure to meet previous
debt obligations,
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Table 4
Military Technicians in LDCs, 1981 a
? Spare parts for Soviet-type weapons-ranging from
tires and gun barrels to aircraft parts.
been ignored or denied by other suppliers, particularly
for:
? Older model Soviet-type aircraft and ground forces
equipment that are reliable and relatively easy to
maintain.
? A limited range of somewhat more advanced hard-
ware-mostly improved versions of Soviet-designed
weapons, including Type-59 (T-54) tanks, a lighter
version of the Soviet 130-mm field gun, and CSA-1
(SA-2) and SS-N-2 (Styx) surface-to-surface missile
systems.
Middle East
10
Egypt
10
South Asia
450
Bangladesh
50
Pakistan
400
a Minimum estimates of number of persons present for a period of
one month or more. Numbers are rounded to the nearest five.
Some 700 Chinese personnel were in LDCs in connec-
tion with the military programs in 1981 (table 4),
about the same number as in previous years. China
has typically maintained a low profile in its military
technical service program. There may be some expan-
sion in connection with increased deliveries, especially
since China will charge hard currency for military
technicians as part of its new policy
A Special Place in the Market
Even though Beijing cannot compete directly with the
big arms-producing nations (the global arms market
averaged $30 billion in annual sales of major weapon
systems and associated support in 1976-8 1) in either
quantity or level of sophistication, it has begun to
carve out a niche in the market. In capitalizing on its
particular production and technical service strengths,
China is appealing to LDC needs that sometimes have
China also can supply production and repair facilities,
such as the tank and jet engine overhaul plant and the
small arms and ordnance factories it has built for
Pakistan. 25X1
Our analysis of arms contracts shows that Chinese
small arms, some crew-served weapons, and ammuni-
tion are less expensive than similar weapons sold by
small suppliers, Western countries, and the Soviets.
The popular Chinese AK-47 rifle, for example, sells
for about 40 percent below its Soviet counterpart, and
the 57-mm antiaircraft gun is nearly 50 percent
cheaper. Chinese willingness to negotiate prices of
more complex weaponry, such as tanks and fighter
aircraft, usually makes them competitive with compa-
rable weapons. Beijing also generally offers liberal
payment terms, typically 10 years at 3-percent annual
interest. 25X1
China probably can meet challenges to its market by
small exporters such as North Korea, East European
countries, Brazil, and other Third World producers
with:
? Generally lower prices and easier repayment terms.
? Faster deliveries on some items such as small arms
and ammunition.
Special discounts and repayment concessions, which
Beijing gives in politically important circumstances,
could give China additional advantages
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The New Look in Technical Services
As with military supplies, China has indicated that it
has technical expertise available for countries willing
to pay. In connection with its growing commercial ties
with the Middle East, Beijing is marketing its services
in the lucrative Arab market and has since 1979
signed contracts with Iraq, Kuwait, and Oman to
construct development projects on a commercial basis.
China has been successful in marketing services be-
cause of heavy advertising of the reasonable salary
rates for personnel-from $2,000 per month for proj-
ect managers down to $400 a month for laborers.
These charges compare with as much as $8,000 a
month for personnel from other Communist countries.
China optimistically predicts that it will have a pool of
a million personnel available for overseas jobs in the
near future, with hard currency earnings projected at
$2.5 billion annually, according to the international
press.
In addition to its commercial workers abroad, China
also maintained 13,000 persons in LDCs, mostly in
Africa, working on aid projects and as teachers and
doctors. LDCs pay very little for the technical assist-
Table 5
China: Economic Technicians in LDCs, 1981 a
Total
North Africa
Algeria
Libya
Tunisia
Sub-Saharan Africa
Angola
The Gambia
Ghana
Guinea
Liberia
Madagascar
Mali
Mauritius
Mozambique
Niger
17,935
1,575
360
5
625
6,975
10
200
10
300
550
150
500
100
250
200
175
150
200
420
400
15
monthly for subsistence (table 5).
China's Economic Program Falters
At the same time that arms sales and commercial
service contracts have become more important, Bei-
jing has nearly terminated its highly successful, high-
ly concessionary economic aid program. New commit-
ments in 1981 totaled only $77 million, their lowest
Nigeria
Rwanda
Sao Tome and Principe
Senegal
Seychelles
Sierra Leone
Somalia
Sudan
Tanzania
125
130
45
300
25
300
400
475
200
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25X1
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Table 5 (continued)
Upper Volta
130
Zaire
220
Zambia
300
Zimbabwe
15
150
150
Middle East
8,010
Egypt
10
Iraq
4,000
Jordan
500
Kuwait
200
3,200
South Asia
1,160
Bangladesh
10
Nepal
200 25X
1
Pakistan
750
a Minimum estimates of the number of persons present for a period
of one month or more. Numbers are rounded to the nearest five.
25X1
level in nearly 15 years (table 6). With its reputation
for effective aid already secure, since the mid-1970s
Beijing has been using its limited aid assets selectively
to achieve immediate political and economic objec-
tives. Egypt and Somalia, for example, received assur-
ances of Chinese assistance after they canceled trea-
ties with the USSR.
Table 6
China: Economic Agreements
Concluded With LDCs, 1981
While many LDCs continued in 1981 to appeal to
China for aid for railroads and other infrastructure
projects, Beijing pointed to higher priority economic
obligations at home. Mismanagement of the Chinese-
built Tan-Zam Railroad (turned over to Tanzanian-
Zambian management in 1976), growing cost over-
runs at ongoing projects, and a lack of local financial
and other support for Chinese projects also probably
have contributed to Beijing's disillusionment with its
foreign aid program. China maintained its traditional
patterns by providing aid to Sudan, Nepal, and Mali
(figure 2).
Beijing's aid has fluctuated widely from year to year,
reflecting economic and political developments at
home and changing attitudes toward the costs and
benefits of aid (table 7). Economic assistance, which
began in 1956 with a few scattered commitments to
East Asian neighbors, gained momentum early in the
1960s as China competed for influence with the
Soviet Union by extending assistance to newly inde-
pendent African countries. The rivalry diminished in
1965 as China reduced its aid program because of
political problems at home and Moscow for the time
being lost interest in Africa. Chinese aid to the Third
World did not recover until after the Cultural Revolu-
tion (1966-69), and China turned its attention again
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Figure 2
China: Economic Aid to LDCs by Major
Recipient, 1956-81
Europe 45
Latin America 156
t
ua as
S
Suhb--SSahaaraa n Africa 2,817
Tanzania 368
Zambia 338-
Other 2,111-
from domestic to international affairs. In 1974 eco-
nomic aid again suffered from domestic political
infighting, and pledges plunged to a five-year low. In
a newspaper article published following Chairman
Mao's death in September 1976, Premier Hua Guo-
feng pledged to honor Mao's policy of assisting poorer
nations within the limits of China's ability.
Prospects for Arms Sales and Economic Aid
The tempo of Chinese arms sales to LDCs in 1981 can
be maintained only through additional crisis buying or
unexpectedly large demands for spares or Soviet-type
equipment from countries holding large inventories of
Soviet hardware. Without these unusual market fac-
tors, China's acceptance as a full-fledged arms suppli-
er will grow only gradually. In the near term, Beijing
will try to capitalize on opportunities for large sales,
mainly in the Middle East, as well as cultivate
traditional clients. In most cases China will emphasize
simple technology, spare parts and services, and sup-
port facilities.
Table 7
China: Economic Aid to LDCs, by Year
Total1
5,484
3,362
1956-71
2,395
850
1972
623
261
1973
600
249
1974
282
267
1975
400
199
1976
155
347
1977
210
269
1978
1979
25X1
Although China cannot compete directly with Mos-
cow in supplying most weapons, it is taking advantage
of crises and of the disaffection of former Soviet
clients to enlarge its market share, mostly at Soviet
expense. Chinese charges for technical services are
one-third below those of the Soviets
LDC officials generally
view the Chinese technicians as highly professional
and efficient. Along with the capability to provide
spare parts and ammunition for Soviet-made equip- 25X1
ment, these factors could help China to make some
additional inroads into Soviet markets. One conse-
quence of this is that Moscow's ability to exert
leverage over LDCs-most recently Iraq-by with-
holding spare parts could be undermined.
We believe that China will improve its longer term
prospects by aggressively marketing more competitive
weapon systems, such as its MIG-21 fighter and
improved medium tanks. Weapons like these probably
will appeal to a wider group of customers and result in
a more stable and predictable flow of orders. Even
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without such improved weapons, China's first taste of
success undoubtedly will stimulate it to greater mar-
keting efforts.
Beijing's decision in the late 1970s to concentrate its
economic resources on spurring domestic development
reduced the possibility of large new Chinese economic
aid initiatives in the near term. It will, however,
almost certainly maintain its present relatively small,
low-profile program directed toward the needy na-
tions because the effort yields useful foreign policy
benefits at low cost. We believe new aid will be mostly
for projects that are compatible with the needs and
technological level of recipients. China also is pushing
contracts to provide technicians and laborers to LDCs
directly and to Western contractors working on proj-
ects in LDCs. With a labor force of more than 1
million persons qualified for overseas duty, Beijing
will be able to fill demands for personnel to work
abroad if it can win new contracts in the highly
competitive international labor market.
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Appendix
China has neither the resources nor the inclination to
become a major aid patron. Chinese officials have
repeatedly stressed that self-help programs are the
only way LDCs can improve their economies and feed
their growing populations. Despite efforts to counter
Moscow's African program, Chinese aid has not
competed with other Communist or Western pro-
grams, even in its 1970-73 heyday. Its $5.5 billion
economic aid commitment for the period 1956-81 has
been dwarfed by the multibillion dollar annual com-
mitments of major Western donors.
Even though China's economic aid to the Third World
has accounted for less than 1 percent of the total aid
flowing to less developed countries in the past 26
years, in our judgment it is among the most successful
of the national aid programs in terms of fulfilling
LDC development objectives often ignored by other
donors. China's focus on a narrow range of LDC
development efforts has allowed Beijing to use its own
limited capabilities effectively. The assistance, which
is both simple and relevant to LDC needs, has been
generally well received and has earned China a
reputation that far exceeds the costs. Beijing usually
provides a balanced package that effectively promotes
both economic and social development
Our analysis indicates that Beijing's aid has been
attractive to LDCs, especially the poorer nations,
because:
? It is among the most concessional aid offered LDCs.
About 15 to 20 percent of the total is given as
outright grants. Interest-free credits, which com-
prise the rest of the program, usually allow at least
10 years for repayment, after a 10- to 30-year grace
period. In contrast, average Western terms specify
repayment periods of 24 years, after nine years
grace, and 2.6-percent interest. Soviet terms usually
require repayment periods of 10 to 12 years, after
one year grace, with 2.5- to 4.5-percent interest, and
even these terms are hardening.
Figure 3
China: Economic Aid to LDCs by Sector,
1956-81
Other 20
Transportation 30
? Project implementation is fast. Nearly $3.4 billion
(about 60 percent of China's total commitment) had
been delivered by the end of 1981.
25X1
? China's economic aid has concentrated on infra-
structure, primary industries, and agriculture, the
most prominent areas of deficiency in LDC develop-
ment. Only 5 percent of the aid has gone to heavy
industry-all in Pakistan (figure 3).
? Medical services, one of China's most effective, 25X1
programs in the Third World, address a high priori-
ty of poorer LDCs. The $50 million worth of known
Chinese assistance to public health has gone largely
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Table 8
China: Economic Credits and Grants
to LDCs, 1956-81
Total a 5,484 3,362
North Africa 331 190
Algeria 92 61
Morocco
Benin 44 15
Botswana 17 3
Burundi 58 34
Cameroon 103 86
Cape Verde 17 2
Central African Republic 14 6
Chad 68 8
Comoros NA
Congo 112 73
Djibouti 30
Equatorial Guinea 24 22
Ethiopia 138 62
Gabon 25 11
The Gambia 17 10
Ghana 42 25
Guinea 134 90
Liberia 23 3
Madagascar 89 73
Mali 127 109
Mauritius 35 1
Mozambique
Niger
Rwanda
Sao Tome and Principe
Senegal
Seychelles
Sierra Leone
64 16
52 14
56 24
2
29
2
55
a Because of rounding, components may not add to totals shown.
b Agreements prior to formation of Communist government in 1975.
Zambia
338
324
Zimbabwe
26
East Asia
338
229
Burma
172
108
Indonesia
47
47
Kampuchea b
92
69
Laos b
26
5
Thailand
NA
Western Samoa
NA
Europe
45
45
Malta
45
45
Latin America
156
42
Chile
65
15
Guyana
37
15
Jamaica
11
11
Peru
42
2
Iraq
45
8
North Yemen
130
90
South Yemen
96
66
Syria
70
70
South Asia
1,264
791
Afghanistan
76
39
Bangladesh
107
24
Nepal
207
106
Pakistan
651
476
Sri Lanka
222
146
Approved For Release 2008/01/15: CIA-RDP83B00851 R000200160003-5
 Approved For Release 2008/01/15: CIA-RDP83B00851 R000200160003-5
Secret
to construct hospitals or clinics, mostly in the rural
areas of 16 countries. In addition, Chinese medical
teams have gone to at least 35 LDCs; in 1981 about
1,500 Chinese medical personnel were working in
developing countries.
Projects are simple to operate and are import-
saving. Chinese aid has stressed construction of
simple processing facilities for raw materials and
foods, and light industrial plants for textiles, ply-
wood, paper, and agricultural implements. These
plants come on stream rapidly, and, because of
intensive training of local personnel, domestic labor
is able to contribute immediately to national devel-
opment programs.
Beijing provides adequate technical services, which
always are in short supply in LDCs. It tightly
controls the execution of projects and supplies its
own administrators, as well as skilled labor and
often unskilled labor, to assure rapid completion of
projects. China's technical services, the least expen-
sive of any nation, have been the most widely
praised aspect of the Chinese development effort.
LDCs pay only a local subsistence allowance for
housing, food, and transportation within the coun-
try. In some cases, particularly for medical teams,
China defrays even these modest costs.
China covers most local costs through commodities
or cash transfers. These transfers-sometimes given
as outright grants-have amounted to nearly $1.5
billion, 45 percent of total Chinese deliveries under
its aid program.
Approved For Release 2008/01/15: CIA-RDP83B00851 R000200160003-5
 Secret
Approved For Release 2008/01/15: CIA-RDP83B00851 R000200160003-5
Secret
Approved For Release 2008/01/15: CIA-RDP83B00851 R000200160003-5