CHINESE AFFAIRS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R000700020012-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 17
• Document Creation Date: December 15, 2016
• Document Release Date: September 10, 2003
• Sequence Number: 12
• Publication Date: July 23, 1973
• Content Type: REPORT

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Chinese Affairs
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23 Jul 1973
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Chinese Affairs
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CONTENTS
23 July 1973
Paige
Peking Mum on Congress . . . . . . . . . . . . . . . . . . . . . I
Problems with the Prince . . . . . . . . . . . . . . . . . . . . . 2
Early Returns on the Spring Harvest . . . . . . . . . . . . . . . . 4
Civil Aviation Agreements . . . . . . . . . . . . . . . . . . . . 5
Pragmatism in Aid . . . . . . . . . . . . . . . . . . . . . . . 6
Canton Prices Bring Protests . . . . . . . . . . . . . . . . . 7
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Making Friends . . 8
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Leadership Notes . . . . . . . . . . . . . . . . . . . . . . . 10
CHRONOLOGY . . . . . . . . . . . . . . . . . . . . . . . 12
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Pekin Mum on Con stress
Although the Western press is predicting if Tenth Party Congress in August,
Peking has not broken olTichil silence on the matter, The leadership may not wallt to
say anything officially until alter the central committee meets to ratify the decision
of the top leadership. There are reports that if central committee plenum will be held
In the latter hall' of July. In the pasi week the only two central committee members
posted abroad returned to Peking, but as of slid-July, a number of province chiefs
who would almost certainly attend such if meeting were still In their honk areas.
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The Ninth Party Congress was held from I to 24 April 1969. A plenum of the
party central committee held in lat ? that a congress would
"an appropriate time."
the congress. The the Niffill congress
opened on I Aprill
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Peking has apparently been counseling Prince Sihanouk 0 o )en direct talks
with the US before the 1 S August bombin r halt
Chinese officials say privately that they must respect Siha?iouk's "Independ-
ence," but they seem to be using a variety of arguments to persuade hiail of the
wisdom of negotiations, They have probably told him that since "victory" in
Cambodia is assured, Sihanouk can afford to make "slight concessions." The
alternative, Chinese officials have said recently, is that the US will find some way to
continue the bombing after 15 August or to encourage and support military
intervention by the South Vietnamese or Thais. One official warned that this would
mean further sulTering for the Cambodian people and leave Sihanouk, even after
victory, with only a "shell of a country."
Chinese officials stress that their relations with Sihanouk are "excellent," but
differences obviously exist. if Sihanouk's statements are taken at face value, he is
prepared to hold out for total political victory. The Chinese, however, want
Sihanouk to start negotiations as soon as possible, and thus remove an irritant in
their relations with the US. Peking believes that Moscow may be in the process of
shifting its support to Sihanouk and would probably like to see formal talks begin
before Moscow has a chance to improve its position by disengaging from Lou Nol.
Public differences between Peking and the Prince showed up clearly in the
speeches given by Sihanouk and Chou at a banquet in early July. Sihanouk harshly
condemned US bombing as "air raids of genocide," rejected US efforts for a
negotiated settlement as "perfidious propaganda," and repeated his demand for a
complete end to all US and allied intervention and insisted on the elimination of the
Lon Not "clique." Chou took a much softer line, avoiding all references to the US
negotiating position and blandly observing that US bombing was arousing "strong
opposition."
Nevertheless, a major split between Sihanouk and Peking is not likely. China
has been the Prince's patron since he was ousted in 1970, and there is no other
country to which he can turn for real support. Peking will be careful not to push the
Prince too hard. An open break now that its three-year gamble on Sihanouk appears
close to paying off would be counterproductive. The Chinese may reason that
Sihanouk's tough stance may actually help them prevent the Cambodian problem
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from damaging Sino-US relations, Peking can convincingly play the tole of u
conciliatory lawyer representing a belligerent and unyielding client and take credit
from both sides if a satisfactory settlement is reached; should the Chinese be unable
to move Sihanouk to an carl,y compromise, they slill sent themselves as
exerfed their best efforts on behalf of a settlement.
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Early Returns on the S grin If rvest
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China's provinces are beginning to report on the spring crop, This crop. mainly
early rice and wheat, accounts for about it third 1)I' the annual harvest. Ptirtial figures
from widely scattered areas Indicate some improvement over it rather disappointing
showing last year, largely because of the Increased acreage under cultivation.
Peking is nevertheless cautioning against premature optimism. Recent radio-
broadcasts From several provinces have stressed the need "vigorously to pursue crash
reaping and sowing." This sort of appeal is made every year, but it sounded
especially urgent this year. Weather has delayed harvesting and replanting in some
areas and yields may be reduced.
The policies implemented in the spring to boost the crop came too late to
affect the early harvest dramatically; their full impact will not be felt until the fall or
even later. As in the past, thousands of youths and cadres were sent down to the
countryside to join agricultural production teams. This year some marginal industrial
plants were closed, and the raw materials due them were diverted to enterprises
more closely associated with agriculture. The industrial workers thus released were
sent to agricultural production teams to provide a pool of skilled labor at the
commune level. This program may, in the long run, prove the most beneficial of all.
Given the present concern over harvest prospects, the regime is unlikely to
experiment with any radical policies during the growing season. Every effort will be
made to apply maximum resources to agriculture between now and the key fall
harvest in September and October.
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Civil Aviation Agreements
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Over the past f'ew months, Peking has signed civil aviation agreements with five
countries--Norway, Sweden, Denmark, Canada, and Greece--an(l Initialed one with
the UK. China now has I') such agreements with non-Communist countries.
None of' the latest agreements will be itmnediately Implemented. Canada and
the UK arc likely to inaugurate flights this year, but Scandinavian Airlines will not
begin flights until sometime next year. China's national airline is waiting for the
Boeing 707s it ordered last year before expanding service to Africa and Europe.
Flights to the US would be a logical extension of Canadian and European routes.
A major problem for European and North American airlines is the reluctance of
Moscow and Tokyo to grant landing rights to flights entering or leaving China. Most
airlines believe these landing rights are necessary to make service to China economi-
cal. Tokyo will probably relax its restrictions if' a Sino-Japanese aviation agreement
is negotiated. Talks between .he two countries are deadlocked on the issue of
Nationalist Chinese flights to Japan. The Soviets may be more receptive to granting,
landing rights now that they have si Ined a civil air pact with Peking.
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Pragmatism in Aid
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Peking, now well advanced In its drive to Import advanced foreign technology,
is making it special effort to adjust its ideological position to accept the idea of
foreign aid as a proper tool for economic development, Speaking In Geneva 141. the
55th session of the UN l eonomic and Social Council, Chinese delegate Wang
Jun-sling strongly endorsed this idea. Wang acknowledged that developing coun-
tries, including China, suffered from Inadequate funds and lack of technological
know-how. lie bowed to the principle that developing nations should rely mainly on
their own efforts and that foreign aid should be used only as a supplement. lie
downgraded the concept of autarky and insisted on "mutual respect and benefit" in
aid relations.
Wang also offered cautious and pragmatic advice on the elimination of "imperi-
alist influences" from the economics of developing countries. lie pointed out that
this was it step-by-step operation and recommended that the developing countries
gradually master advanced foreign technologies.
Wang could not resist a swing at the USSR. I-Ie denounced those who realize
expansionist ambitions by begging funds and technologies from abroad, while they
were selling obsolete equipment and technologies to developing countries at high
prices and excessively high interest rates.
Wang's speech went somewhat bcycnd the statements made by the Chinese
delegation last April at the meeting of the UN Economic Commiszic: for Asia and
the Far Cast. At that meeting, the Chinese delegate went no further than to explain
that self-reliance did not preclude international economic and trade relations and
that the Chinese were "ready to learn from the advanced experience of other
^.oples to make up for our own inadequacy."
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Canton Prices Bring Protests
There is mounting evidence that sharp rises in the prices of Chinese textiles at
the spring Canton trade fair brought widespread complaints and stiff resistance I'roni
many of China's best customers. Peking,; decision to boost prices was probably
based on a number of factors--rising costs of imnorted raw materials, improvements
in the quality of Chinese textiles, increases in world textile prices, currency revalua-
tions by Japan and other major trading partners, and increased Chinese foreign
exchante needs, Textiles normally account for between 25 and 30 percent of the
annual value of Chinese exports.
US and West European buyers bought quantities of' textiles than they
had planned because of the high prir?'.s. The increased prices were particularly
unwelcome to prospective US importers, and even the Japanese, the primary buyers,
are believed to have sharply curtailed silk purchases in response to the increases. The
recent yen revaluation would have allowed Japanese buyers to absorb some in-
creases, but price boosts on silk, 75 ' ercent and more above fall fair levels,
apparently more than offset any gain from the revaluation. The prices of some
cotton goods were more than double those at the autumn fair, Many Bong Kong
merchants have delayed signing customary contracts for textile purchases and are
continuing to negotiate in hope that prices will be reduced. (long Kong, which ranks
second to Japan as an importer of Chinese textiles, normally buys about $50 million
worth of clothint-, yarn, fabric, and related articles from China annually.
The over-all effects of the price increases on textile carr;7ngs cannot be assessed
at this point. Indications that the Chinese were left with substantial amounts of
unsold textiles when the fair closed 7uggest that Peking overestimated the willingness
of customers to pay the high prices, Tltcre is no evidence that domestic problems
with textile supplies have cut Chinese textile export capabilities. Output of wool,
silk, and man-made fiber probably increased last year, and massive cotton imports
this year are believed to have offset the poor 1972 cotton crop.
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Making Friends
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Last year was a banner year Ior 'eking In terms of international diplomatic
recognition, 'T'wenty nations recognized the ('eking government, and many of them
sirnultancously cut diplomatic ties with the nationalists on Taiwan. All of the major
industrial powers except the US now recognize ('eking, and quasi-diplomatic rela-
tions have been arranged with Washingloma.
The pace has now slowed. So I'ar this year Chinese diplomats have been able to
garner recognition from only one new country (Spain). but they have not slackened
their efforts to establish diplomatic or trade relations with others, They are trying to
Persuade African and Latin American nations to enter into diplomatic or trade
relations. Vice Minister of Foreign Trade Chou Ilea-min arrived in Ver ,zucla on I I
July to settle the details of an agreement signed last November in Peking for the sa;c
of $23 million worth of' Brea to China. Since last autumn the Venezuelan Govern-
ment has been indicatins it will establish some form of permanent contacts with
China. V;;nezuelan diplomatic representation in Nationalist China has been reduced
to the charge d'affaires level in an effort to let Taipei down gradually. Subject to the
vagaries of election-year politics in Caracas, an exchange of permanent trade offices
or even ambassadors by December would not be surprising.
Using its tes'ed method of mixing economic blandishments with discreet
diplomacy and shows of flexibility on the presence of Nationalist Chinese experts in
African nations, Peking is trying to nudge Niger and Upper Volta into relations.
China has donated 5.000 tons of grain to each of'the two nations to help relieve the
effects of the Sahelian drought. Earlier this year, after recounting the difficulties
facing Unner Volta, President
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Lenderslri a Notes
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Ilan Kuo-feng, the llunan Province chief now based in Peking, may be the
party's watchdog for agriculture. Since May, Ilea has met with several foreign
agricultural delegaNuns, a function perforrnecl at times in the past by alternate
Politburo member C'hi Teng?kuci, !I' Peking has switched agricultural responsibility
to 1111.1, it Is probably an index of Peking's determination to avoid it repetition of the
disappointing harvest last year, lion was called to Peking after the Fall of Lin 1'iao
'Intl has since been listed with leaders just below Politlnrro level. Chou Vii-lai
reportedly put Ilia among Illy younger leaders who are part of the "successor
group." Ilea's prospects for Politburo membership at the next party congress are
good, but his fortunes may now be tied to the performance of the agricultural
sector.
Among its myriad tasks, the coming party congress may he asked to resolve the
status of Kang Sheng. memher of the Politburo's powerful standing committee.
Kang has been sidelined since late 1970, but unlike other leftists who are clearly in
disgra:c. Kang's name is kept before the public eye. On 12 July, and on five earlier
dates, NCNA reported that Kang sent a wreath to the memorial service of a deceased
leader, On each occasion except the last, lie was referred to by his Politburo title.
Kang did not figure either as conspirator or loyalist in the official account of Lin
Piao's alleged coup plot. Leaders currently in good standing have been described as
siding with Mao during that event, but the only person to assert Kang actively
supported Mao has been Mao's wife, Chiang Ching,
The Peking rumor mill has named l'ai Hsiang-kuo as the next PLA ('hict' of
Staff. In 1970, Pai gave up military duties in Kwangtung to become minister of
foreign trade. lie has performed well in the job, but Peking is sensitive about the
continued large part played by military men in civilian roles. The military man in
charge of civil aviation was recently replaced by a civilian. There are some nimors
that i'ai will merely return to military life. In any case, Tai's success in the foreign
trade ministry has probably ensured him a place in the central hierarchy.
The chief of' staff post has been empty since the fall of Lin Piao, and this long
hiatus may account in part for the rumored rehabilitation of two former chiefs of'
staff. A traveler reported that Iluang Yung-sheng, the last to hold the job, may he
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reinstated to military duties, Accordinu to if rumor In I'cklug, Lo Jui?chi-g, chief of
stall' until l H S, will he the next major returnee. Army Day celebrations on I
August may shed some light on the status of' the two; last year Peking used the
occasion to bring hack two disgraced military men.
An N('NA official has reportedly conliimed the oft-run-ored rehabilitation of
Li C'hing?chua n, I'miner southwest regional party toss, The official did not specify
ITS new duties, saying only that he is now active. Li has not -eappealed in public,
hilt may do so at the party congress, Li's return would be a %elhack for Chiang
Ching, who personally supported two young Sicchwaii officials Jailed by Li. During
the Cultural Revolution, Red (cards attacked LI for emphasizing fertilizer rather
than politics; Li's policy is more acceptable today given the concern over harvest
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R?IC) July I'ICC Inilltaty delegation arrives in Albania 10 cclebtate file 30th
anniversary nil ire founding of the Albanian People's Array,
Celebrations also held in I'cklug, with the a n{vcrsary saluted h
it joint editorial in /.ibrtarion Marv Dail, and Prod Ir'.t /)oily. II 25X1
') July Advance party prcparing trench President Pom pidou's scheduled
fall visit to China departs Peking.
10 July China reeogni,,es independent Bahamas.
treaty of friendship, coolie r:tloll, and mutual assistance.
Peking celebrates I2th anniversary of the PIW-North Korea
I I July Pal Ilsiang?Kuu, Kuo Mo?jo, and Liao Cheng?chih, give red carpet
treatment to Kalicita Okazaki, head of the Japanese Memoran-
dum Trade Office in ('eking.
C'hi:ro Kitan?Irua meets visiting delegation of overseas Chinese
scholars and students now living in the US and Europe.
Vice foreign Minister Ilan Niert?lung and others attend reception
at the Mongolian Embassy celebrating anniversary of fire Mon-
golian revolution.
11.1 t{ July Vice Minister of Foreign Trade Chou Nua?min visits Venezuela.
signs agreement or pure asin Venezuelan fertilizer. returns
home via Madrid at1d Paris.
13 July Chinese table tennis team returns home after visit to Malaysia.
Thailand, and Burma.
14 July 1''-"reign Minister Chi I'cng fci and Vice Foreign Minister C.'hiao
Kuan?hua attend Bastille Day celebration at Drench Etttbassy.
President Sam Nujoma arrives in Peking.
Delegation of Southwest African People's Organization led by
16 July Canada and China reach agreement on reciprocal registration of
trademark:.
NCNA publicly identifies Liu llsiang?ping as the new minister of
public health. Liu was identified privately in the position a
month earlier.
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Sina?Sovict civil aviation agreement provides both Chinese and
Soviet service between Moscow and Peking. Aside from annual
trade ltotucols this Is the first Sinot?Sovict ligrcement since
11)(11),
17 July the rebuilding of provhicc?icvcl Youth League corntllit(ccs was
completed with the formation of committees in Sinkiang anti
Szechwan, The process beg; ri last February,
Mao ` 'sc?ttuig and Chtni I ti Iai meet Willi visiting Chinese-
American physicist Dr. Yang Chen-11111g.1
North Vietnamese nrwspapcr dole ation arrives in Peking; group
is retell by I'co)rlc x I)n(Ir stay('.
`I'cng II iao?ping, Vice Premier of tli ? State Council, receives
visiting Nepalese Princess Shoba Sluthi,
i') July Peking contracts for 500,00() toms of US wheat at it price or $74
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