Document Type: 
Document Number (FOIA) /ESDN (CREST): 
Release Decision: 
Original Classification: 
Document Page Count: 
Document Creation Date: 
December 16, 2016
Document Release Date: 
December 14, 2004
Sequence Number: 
Case Number: 
Publication Date: 
June 30, 1972
Content Type: 
PDF icon CIA-RDP85T00875R001500040025-1.pdf411.24 KB
36 Approved For Release 2005/01/11 : CIA-RDP85T00875R001500 0025- ecre, 25X1 DIRECTORATE OF INTELLIGENCE WEEKLY SUMMARY Special Report Chinese Aid in the Third Wirld DOIJM!NT SJVICES B1AICFI Secret F COPY N! b/4197 30 `;~Q Nol o[Sg~ No. 0376/72A App F I as ((~~11 'oA-RDP85T00875R001500040025-1 25X1 Approved For Release 2005/01/11 : CIA-RDP85T00875R001500040025-1 Approved For Release 2005/01/11 : CIA-RDP85T00875R001500040025-1 Approved For Release 2005/01/11 : CIA-RDP85T00875R001500040025-1 Chinese Aid in the Third World Pakistan Burundi Tanzania Burma Somalia Ceylon Yemen Afghanistan Ethiopia Zambia Guinea Chile Sudan Mali Nepal Rwanda.... Approved For Release 2005/01/11: CIA-RDP85T00875F70 040025-1 Approved For Release 2005/01/11 : CIA-RDP85T00875R001500040025-1 SECRET China moved from the isolation of the Cul- tural Revolution in 1969 to recoup its diplomatic losses and compete for major power influence. The Chinese economic aid program in the Third World was revived after being stagnant, in terms of new commitments, for some five years. Chi- nese aid commitments of nearly $1.6 billion in the past two years have more than doubled Peking's previous total. Aid allocations thus far in 1972 maintain the pace of the previous two years, indicating the priority given to economic aid di- plomacy. Military aid, although totaling only an estimated $440 million, has become important for some recipients. Peking has at the same time sought to re- move the subversive taint many Third World countries associated with Chinese aid. Ideological rhetoric has given way to the pragmatic considera- tion of expanding Chinese influence. Peking real- izes that its earlier tactics, such as aiding dissident groups seeking to overthrow the host government, impede normal state-to-state relations. Peking is making compromises with monarchies and mili- tary juntas and ;s courting non-revolutionary re- gimes in Ethiopia, Iran, Kuwait, and Turkey. The Chinese have even warmed to the Numayri regime in Sudan, which decimated the Sudanese Com- munists in mid-1971. Economic Aid Step-Up Some 60 percent of the nearly $2.6 billion worth of aid extended under Peking's 16-year-old program has been committed during the past two and a half years. During this period aid has been extended to 27 countries, many of them new recipients. Of the peak extensions of nearly $710 mil- lion in 1970, about 60 percent w; s allocated for the Tan-Zam Railroad while some $200 million went to Pakistan. About one fifth of the $553 million extended in 1971 went to Somalia alone. Peking also revived $57 mii;ion of unused credits to Burma and extended an additional $24-million commodity credit in an orfort to normalize rela- tions with Rangoon. Last "ear also saw China's first economic aid commitments to Chile, Ethi- opia, Iraq, Peru, and Sierra Leone. Special Report 25X1 The pace has quickened this year with nearly $305 million already extended to ten countries. Burundi, Guyana, Malta, Mauritius, and Rwanda, accepting their first Chinese aid, received almost half. The largest CI inese credit to a Latin Amer- ican country also was recorded this year when $65 million was committed to Chile. About 40 percent of Chinese aid has been allocated for the construction of railroads and roads. More than $400 million has been extended for the Tan-Zam Railroad, the largest single Com- munist financial commitment for an aid project in a less developed country. The Chinese also have built roads in Nepal, Pakistan, Yemen (Aden), and Yemen (Sana), and others are scheduled for Somalia and Sudan. A third of total Chinese aid has bean in the form of commodities and foreign exchange, con- trasting with less than five percent of Soviet aid devoted to these purposes. China has committed at least $160 million in hard currency, of which almost $60 million has been supplied since early in 1970. Light industrial projects such as textile, plywood, paper, food processing, and agricultural implement plants, which are simple to operate and maintain and require a minimum of imported raw materials, account for about 15 percent of Chinese aid. The only heavy industrial project under China's foreign aid program is a machine- building complex and foundry-forge plant in Pakistan. The balance of Peking's aid has been for agricultural and multipurpose projects, sports stadiums, conference halls, schools, hospitals, theaters, and hotels. The repayment terms of Chinese aid are al- most unbeatable among world assistance offers. All credits are extended without interest and are repayable in goods over ten to 30 years after grace periods of five to ten years. The Tan-Zam railroad agreement, for example, calls for repay- ment over 30 years beginning in 1983. The lengthy repayment periods are intended to ensure that the projects financed by the credits will pay Approved For Release 2005/01 k8L- P85T00875R001500040025-1 Approved For Release 2005/01/11 : CIA-RDP85T00875R001500040025-1 Chinese-aided textile factory in Yemen (Sana). for themselves. Projects usually are scheduled for full-scale operation long iafore repayments fall due. The Chinese characteristically flood their aid projects with their own personnel, including semi-skilled as well as skilled workers. This has speeded construction of Chinese projects, because it avoids many labor problems encountered under Western and Soviet programs which depend on local workers to perform all but the highly skilled and : ofessional tasks. The number of Chinese technicians in less developed countries has grown from 25 ir, 1957 to some 20,000. More than 90 percent are i Africa. Despite this growth, the number employed has fluctuated shat 7ly and has been determined largely by the demands of a few labor-intensive Special Report construction projects. The 1,000 working on the Sana - Al Hudaydah road in 1961 represented more than 70 percent of all Chinese technicians abroad at that time. During the mid-1960s large numbers were used to construct a road in Nepal and several plants in Guinea and Mali. The num- ber of technicians abroad increased fivefold from 1968 to 1971 as work on the Tan-Zam Railroad accelerated. By mid-1972, an estimated 15,000 Chinese were in Tanzania and Zambia, nearly three fourths of all Chinese in the less developed countries. The presence of Chinese technicians costs the host country little. Peking pays all of the foreign exchange costs, such as transportation a; id salaries. This contrasts with Soviet and most West- ern aid programs, which usually require hard cur- rency repayment for technical services. China asks orly that the recipients pay room and board and other local costs, and these usually are covered by Approved For Release 2005/01/185T00875R001500040025-1 25X1 Approved For Release 2005/01/11 : CIA-RDP85T00875R001500040025-1 Approved For Release 2005/01/11 : CIA-RDP85T00875R001500040025-1 Approved For Release 2005/01/11 : CIA-RDP85T00875R001500040025-1 Chinese technician in Guinea teaches op ration of Chinese machinery. commodity imports under the Chinese credit. Furthermore, Peking requires its technicians to live at the same standard as their local counter- parts, keeping expenditures to a minimum. Military Aid-Small but Selective Military assistance has played a compara- tively small role in the Chinese aid program. Only about $440 million has been provided since 1956. Most of this has gone to legitimate governments and only a negligible amount to revolutionary movements. About $300 million went to Pakistan and nearly $40 million to Tanzania, the only countries which have developed some dependence on Chinese arms. Pakistan, apparently concerned over its de- pendence on US arms, began seeking an arms aid relationship with Peking in 1965 even before that year's Indo-Pakistani war, during which -he US Special Report Local and Chinese personnel work on Tan-Zam Railroad. halted its arms shipments. During the war, Pak- istan negotiated an agreement with China for $75 million worth of arms, which were delivered not only rapidly, but without charge. The following year China provided an additional military aid grant of $42 million. Through 1971 several other pacts totaling $130 million were concluded. By mid-1972, China had delivered an esti- mated $200 million worth of military equipment Islamabad Approved For Release 2005/01/1 SEREFf85T00875R001500040025-1 Approved For Release 2005/01/11ECtqff85TOO875ROO15OOO4OO25-1 25X1 China has also Lecome Tanzania's chief source of military aid. Peking has delivered light tanks, patrol boats, landing craft, anti-aircraft Chinese Military Aid to Less Developed Countries 1956 - June 1972 TOTAL Pakistan Tanzania Indonesia Cambodia Ceylon Congo Syria Guinea Burundi Sudan Million US $ 440 a/ 25X1 25X1 300 38 21 14 6 3 2 2 2 2 aj Not including Algeria, Ghana, Iraq, Mali, Sierra Leone, Uganda, and Zambia. M iitary aid has been provided to these countries, but there is no information on its magnitude. However, the total is not believed to be significant. Special Report guns, and large quantities of small arms and other military-related equipment. In aJdition, it has constructed an arms repair facility and a police training school. D:.r es Salaam's decision to unify its main- land and Zanzibar armed forces and to place the servicing of its military establishment largely in the hands of the Chinese apparently was made early in 1969. Within a year, Canadian and Soviet programs were pushed out. The number of25iX1 nese military advisers and technicians rose from 220 in 19G3 to an estimated 735 in 1971. Chinese engineers also are supervising con- struction of a naval facility at Dar es laam scheduled for completion this year. China also is developing an air defense sys- tem for Tanzania, including the construction of an airfield some 90 miles from Dar es Salaam. Approved For Release 2005/01/115 . I5TOO875ROO15OOO4OO25-1 Approved For Release 2005/01/11 : CIA-RDP85T00875R001500040025-1 SECRET 25X1 countries. Aid in each case has reflected the gen- eral warming of relations between China and the recipient and has most often followed diplomatic recognition. It has been China's means of estab- lishing a presence in many Third World countries and promises to remain the most effective tool for expanding Chinese influence in these coun- Two new military aid clients already have tries. been added this year-Burundi and Sudan. Tht New aid commitments are likely to fluctuate with political considerationu and new opportuni- ties, but over the next few years, zre likely to remain at a high level. Chinese programs will continue to emphasize labor-intensive projects, and are expected to continue to focus on Black Africa, where Peking can meet aid requirements and effectively challenge Soviet and Western in- fluence. While the emphasis remains on Africa, more Chinese ecor:,nic and military aid may flow to Asia, the Middle East, and Latin America, Foreign aid will continue to serve as a key but in those areas it is not likely to be as great as instrument of Peking's policy in Third World Soviet aid. 5X1 Chinese-built cigarette factory in Mali. 25X1 Special Report Approved For Release 2005/01/1 SERITB5T00875R001500040025-1 25X1 Approved For Release 2005/01/11 : CIA-RDP85T00875R001500040025-1 Approved For Release 2005/01/11 : CIA-RDP85T00875R001500040025-1