INTELLIGENCE MEMORANDUM CHINA: AGRICULTURE IN 1971 AND PROSPECTS FOR 1972

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CIA-RDP85T00875R001700030107-9
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July 1, 1972
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Sanitized Copy Approved for Release 2011 /01 /18 CIA-RDP85T00875R0017000 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R0017000 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 '5L-2 25X1 Confidential DIRECTORATE OF INTELLIGENCE Intelligence Memorandum China: Agriculture in 1971 and Prospects for 1972 Confidential ER IM 72-107 July _19.7.2 Copy No. 83 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 WARNING This document contains information affecting the national defense of the United States, within the meaning of Title 18, sections 793 and 794, of the US Code, as amended. Its transmission or revelation of its contents to or re- ceipt by an unauthorized person is prohibited by law. Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 CONFIDENTIAL CENTRAL INTELLIGENCE AGENCY Directorate of Intelligence July 1972 INTELLIGENCE MEMORANDUM CTUNA: AGRICULTURE IN 1971 AND PROSPECTS FOR 1972 Conclusions 1. In spite of poor weather, grain production in the People's Republic of China (PRC) in 1971 probably equaled 1970's record harvest of 215 million to 220 million metric tons. Improvements in, the management of water resources and further increases in chemical fertilizer and agricultural equipment offset the effects of floods, droughts, and insect infestations. 2. Agricultural production in 1972 probably will exceed production in 1971 by a good margin simply because of the continued rapid increase in industrial inputs into agriculture. Moreover, the margin could be raised substantially if weather proves better than average. Finally, the Chinese may be entering a period when their investment in water control measures will begin to pay off handsomely. 3. In the first half of 1972, Peking has reaffirmed its pragmatic policies toward agriculture, notably its permissive attitude toward private plots, traditional handicrafts, and petty trade. Within the commune, the production brigade and the production team retain their power to decide on day-to-day details. Further evidence of the regime's tacit acknowledgement of the importance of incentives is a series of recent price c,cts in industrial inputs coupled with increases in agricultural procurement prices. 4. Starting in 1961, the PRC has imported 4 million to 5 million tons of wheat each year to feed cities in the northeast and, incidentally, to reduce the strains in the domestic procurement system. In 1971, imports were cut to 3.1 million tons, partly because of the need to reduce trade unbalances and partly because of an unwarranted anticipation of a sizable Note: This memorandum was prepared by the Office of Economic Research. CONFIDENTIAL 25X1 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 CONFIDENTIAL increase in grain production. Now in 1972, Peking has signed a new contract with Canada to bring imports back up to more normal levels. 5. China's main agricultural policies at mid-1972 are appropriate to its general economic strategy of vigorous military-industrial expansion combined with reasonable prov'3ion for the population.The well-entrenched policy of supplying increasing industrial inputs for agriculture and the moderat,,- approach to agricultural organization and incentives should result in enough food and clothing to meet the basic needs of a rapidly growing population during the remainder of the Fourth Five-Year Plan period (1971-75). At the same time, no dramatic technological breakthrough is in the offing nor will agriculture generate large new quantities of export goods. 6. The long-term economic strategy of the PRC has focused on the rapid expansion of military-industrial strength. Fundamental to this strategy has been austerity iii consumption and a comparatively low priority for agriculture. Originally, Chairman Mao Tse-Tung and his associates believed that, collectivization and socialist incentives were most of what was required for agriculture to meet its goals. The disaster years of 1959-61 dispelled thin belief, and beginning in 1962, Peking began to inject resources into agriculture in ever-increasing volume. This turnabout in policy helped overcome the immediate food crisis and enabled the agricultural sector to expand in line with China's population over the past decade. 7. This memorandum first describes the performance of the agricultural sector in 1971. It examines weather conuitions, the availability of inputs, and agricultural policy. The memorandum then reviews the results of agricul' aral performance on food consumption and on grain imports. Next, agricultural prospects for 1972 and the remainder of the Fourth Five-Year Plan are examined. The Appendix gives a breakdown, by province, of official claims for grain production in 1970-71 Agricultural Perf:)rmance in 1971 8. Agricultural performance in the PRC in 1971 was a disappointment to the regime. Although Peking initially claimed that grain 2 CONFIDENTIAL Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 CONFIDENTIAL production exceeded production in 1970, the regime has since backed off from this claim. Production of most industrial crops and soybeans apparently fell short of production in 1970. According to an official announcement in December 1971, hog numbers increased by 14% - the most optimistic percentage production claim. Even this claim was revised downward to 11% in March 1972 The Chinese press has singled out poor weather as the main problem in agriculture in 1971. Independent information on growing conditions confirms that agriculture indeed suffered from widespread floods and droughts as well as abnormally high rates of insect infestation. Grain Production 9. In late 1970, Premier Chou En-lai told the American writer Edgar Snow that grain production in 1970 was more than 240 million tons. At year-end 1971, the Chinese press reported a new record crop of 246 million tons. However, subsequent down-grading of provincial claims and the failure of the regime to repeat this national claim suggest that the initial claim was a preliminary estimate. 10. As Chou himself has frankly conceded, the Chinese statistical apparatus has serious gaps in its coverage of the economy. The series for grain production used in this memorandum puts production in 1971 at the same level as in 1970 - 215 million to 220 million tons (see Table 1). The beneficial effects in 1971 of larger amounts of chemical fertilizers and improved water management were offset by extensive poor weather. The grain area affected by serious drought, water-logging, windstorms, and insect pests was said by the Chinese press to have been three times as large as in 1970. The Spring Harvest 11. The spring harvest normally accounts for about one-third of the annual harvest of grain, the fall harvest for the remainder. The spring harvest of 1971 exceeded the good spring harvest of 1970. Most of the increase stemmed from an increase in early rice output in the south, which is normally one-half of the spring harvest and which be_iefited from a 20% increase in acreage. But for this acreage increase, the early rice output would not have been as good as the excellent harvest of 1970. Early rice production in Kiangsu, Hupeh, Szechwan, Fukien, Hunan, and Anhwei was said to have increased by 20%; these provinces also reported the largest increases in early rice acreage. However, these provinces normally account for only about one-third of the total early rice acreage. Most of the remaining early rice provinces - Chekiang, Kiangsi, Kwangtung, and Kwangsi - reported little CONFIDENTIAL Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 (SUN r'IJ)ENl'IAL People's Republic of China: Production of Grain Year Production Year Production 1964 180-185 1965 190-195 1957 185 1966 195-200. 1958 200 1967 210-215 1959 165 1968 195-200 1960 160, 1969 200-205 1961 160 1970 215-220 1962 175-180 1971 215-220 1963 175-180 or no increase over 1970. Drought lowered the early rice output in South China - particularly in Kwangtung, which accounts for about.20% of the early rice acreage. 12. Early harvested crops in the north - primarily winter wheat - did not do as well as the mediocre 1970 crops. Below average precipitation in the winter and spring over the major winter wheat region retarded plant growth, and heavy rains in June caused high harvest losses. In sum, a good early rice crop outweighed a mediocre harvest of winter wheat; giving the regime a small margin above the good spring harvest of 1970. The Fall Harvest 13. The Chinese made no overall claims for the 1971 fall harvest except to note that it was affected by serious drought and waterlogging. Only Shansi Province was cited by the Chinese as having a better fall harvest than in 1970. In 1970, China's fall harvest was excellent in the north but only average in the south. 14.. During the month of June 1971, extensive rain fell on the entire North China Plain. The extent of this rainfall is shown on the map, Figure 1. Although this rainfall did not lead to widespread flooding, it was sufficient to cause local flooding and extensive waterlogging. The lack of information from either Chinese or independent sources makes it difficult to judge the severity of this waterlogging and its effect on crop yields. However, a comparison of provincial year-end statements with statements made at the time of the harvest suggests that the fall harvest was probably less than in 1970. CONFIDENTIAL Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 CONFIDENTIAL People's Republic of China Above Normal Rainfall, June 1971 15. In July, widespread drought hit Eastern, Central, and Southwest China as well as Fukien Province in South China. This drought area is shown on the map, Figure 2. interruptions to planting schedules in areas with inadequate water conservation. Many of the crops, weakened by drought, succumbed to insect damage. In addition, the expansion- of the early rice acreage had been at the expense of intermediate rice and may also have resulted in a reduced acreage of fall harvested rice. As a consequence of the drought and a possible decline in fall rice acreage, the harvest of late rice was at best. only equal to the output of 1970. 16. The only other important fall harvest area is in Northeast China. No harvest statement was issued for Liaoning. The harvest was reported to have been "fairly good" and "good" in Kirin and Heilungkiang Provinces, respectively. These signal words mean the harvest was below average in the CONFIDENTIAL Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 CONFIDENTIAL People's Republic of China Drought, July 1971 ~6eu ;Rlc:o Predaml nn nl Northeast. Insect pests and unfavorable weather - windstorms, drought, waterlogging, and hailstorms - appear to have been responsible for the lackluster performance. 17. In short, the fall harvest of grains was not quite up to the fall harvest of 1970. Grain production for 1971 as a whole is estimated as approximately the same as in 1970, with the spring harvest slightly ahead and the fall harvest slightly behind. Industrial Crops and Soybeans l8. The performance of industrial crops in 1971 was unimpressive. Only sesame and rapeseeds, tea, and silkworm cocoons did better than in 1970. The other industrial crops - cotton , other fiber crops, tobacco, sugar, and the other oil seed crops - fell behind those of 1970. The dearth of CONFIDENTIAL Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 CONFIDENTIAL information published on the acreage planted to these crops and the indications of expansion in food crop acreage in 1971 suggest that the area sown to industrial crops may have decreased. Soybeans 19. Soybeans - traditionally one of China's leading crops - have not received much attention in the Chinese press in recent years. In 1970, weather conditions were exceptionally good in Northeast China, where more than 40% of China's soybeans are produced. In contrast, in 1971, the weather in his area was quite poor. Increases in soybean production in the other producing areas were not sufficient to offset the decline in production in the Northeast. 20. The tight soybean situation has been reflected in a marked decrease in soybean exports to Japav, the PRC's principal soybean customer; see the following tabulation (in thousand tons): Year Exports 1968 417 1969 377 1970 291 1971 283 The Japanese; hoped to import at least 250,000 tons in 1972; the Chinese have madc? available less than 100,000 tons. Cotton 21. Cotton production fell from 1.7 million tons in 1970 to 1.6 million tons in 1971 because of unfavorable weather and, probably, a decline in acreage. Drought conditions in July in Central and East China and heavy rains during the last ten days of June in North China seriously damaged the crop. Substantial increases, in production in Shensi (20% over 1970) and in Szechwan (18% over 1970) almost certainly were insufficient to make up for the deficit. Sugar Crops 22. Output of, both sugar beets and sugar cane was lower in 1971 than in 1970. In. Heilungkiang, China's major sugar beet area, drought damaged the sugar beet crop. In Kwangtung, which accounts for more than 40% of China's sugar cane acreage, a series of typhoons caused severe lasses. Only Szechwan - China's second most important source of sugar cane - claimed a substantial increase in sugar cane production of 25% above that of 1970. CONFIDENTIAL 7 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 CONFIDENTIAL Factors Affecting 1971 Performance 23. Whereas weather was a negative factor in the agricultural picture in 1971, technological inputs - such as chemical fertilizers, improved water control, and increased mechanization - were offsetting factors on the positive side. 24. The supply of chemical fertilizers available to agriculture has increased every year since 1961 (see Table 2). Although imports of chemical fertilizers remained unchanged in 1971 compared with 1970, domestic output reportedly increased by 30%. Most of this increase came from the growir,,,- number of small and medium-size plants that came into production in 1 971. Because there was no increase in imports, the overall increase in chemical fertilizer availabilities in 1971 (when measured in nutrient content) was only about I S% over 1970. This was a smaller percentage increase than the 20% increase in nutrient content in 1970 but was still substantial. 25. To reap the greatest advantage from present and future increases in chemical fertilizers, high-yielding farmlands with dependable systems of water supply and water control are essential. Because natural conditions in China are highly variable, the improvement of water management has been singularly difficult, particularly in the large and poorly drained areas of the North China Plain.* Earlier attempts at water conservation during the Great Leap Forward (1958-60) were of little or no value. In 1970 and 1971, plans that are more rational - involving smaller projects - have been emphasized. The claims for these projects have been reserved compared with claims during the Leap Forward. In 1971, for example, the Chinese claimed that 1.8 million hectares - about 2% of the total cultivated land - were added to high yield farmland. Although the small size of these projects suggests that they may not be effective under extreme weather conditions, they undoubtedly are.adding to the capacity of China's agricultural sector. 26. The mechanization of Chinese agriculture is slowly proceeding from a narrow base. Sources of energy for agricultural use - electric power and petroleum - have expanded in concert with the increased inventory of agricultural machinery. In 1971 the Chinese claimed that the total value of farm machinery production was 21% above that of 1970 and that the production of tractors, walking tractors, internal combustion engines, and rice-transplanters topped previous annual records. The use of additional machinery during peak harvest periods when the labor supply sometin,. s becomes a critical element has erabled the Chinese to gather crops in more timely fashion and to reduce harvest losses. In some cases, the use of machinery ha.. enabled the Chinese to increase the effectiveness of their CONFIDENTIAL Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 CONFIDENTIAL Table 2 People's Republic of China: Estimated Availability of Chemical Fertilizers a/ Year Total Supply Production Imports 1961 0.50 0.27 0.22 1962 0.65 0.41 0.24 1963 1.11 0.57 0.54 1964 1.04 0,68 0.36 1965 1.52 0.88 0.64 1966 1.80 1.08 0.72 1967 1.94 0.78 1.16 1968 2.18 0.94 1.24 1969 2.45 1.14 1.32 1970 2.95 1.46 1.48 1971 3.38 1.90 1.48 a. Actual weight of rrimary nutrient content -- nitrogen, phosphoric acid, or potassium oxide. Because of rounding, components may not add to the totals shown. limited land resources through the introduction of more intensive cropping patterns. In still other cases, machinery has relieved some of the most burdensome physical toil of the countryside -- the observer- often can see one bulldozer and hundreds of basket carriers on rural construction projects. In summary, even though the PRC would be ill-advised to substitute machinery for (the abundant) manpower on a wide scale, the gradual increase in rural mechanization can add an element of flexibility to productive capacity and eliminate at least a portion of the backbreaking tasks. 27. Whereas the increasing flow of inputs gives an upward slope to the long-term trend line, the success of agricultural production in China in any given year still depends heavily on weather conditions. During 1971, for example, poor weather offset the beneficial effects of the increased inputs made available during the year. Weather patterns are notoriously unstable over large portions of China's farmland, and the twin problems of too little or too much water continue to plague Chinese agriculture. One of the instructive features of Peking's programs for better water management is the potential for reducing the effects of bad weather - that is, reducing the size of the troughs in agricultural production. CONFIDENTIAL 9 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 CONFIDENTIAL Agricultural Policy 28. The Chinese have been pursuing their new agriculture investment policy for a decade. The policy almost certainly is being continued as a key element in the Fourth Five-Year Plan, whose details are yet to be unveiled. The new policy is an "agriculture first" policy only under certain circumstances. Military-industrial expansion is the priority economic goal of the regime; agriculture has first call on resources only when food supply dips below that needed to maintain productive efficiency and popular morale, as happened in 1959-61. The added investment in agriculture has resulted in substantial increases in production of grain. Industrial crops have fared less well, partly because acreage had to be diverted to grain crops. The minimum aim for industrial crops has been to keep output up by increasing average yields on the reduced acreage. 29. The "agriculture first" policy has also a more or less stabilizing effect on agricultural institutions. Throughout the past decade, the cultivation of .private plots has been permitted and private hog raising has been positively encouraged. In addition, the production team - the smallest unit of the three-tier organizational system in rural areas - has remained the locus of economic decision making and control. For most of the period, farmers have been paid more in accordance with work done than need or political attitudes. These pragmatic policies - which cut against the grain of the more radical cadres - have contributed substantially to the increase in agricultural production, particularly of vegetables, meat, fish, and other non-grain foods. During 1971 these policies received further emphasis. Thus, side-line activities such as pottery-making and woodcrafts were encouraged as sources of supplementary income for both individuals and production teams. Collective units, such as communes, were urged to plow back the funds earned through these activities in agriculture. 30. Finally, during the second half of 1971, the central authorities chose to stimulate agricultural production further by decreasing the price of some technological inputs and by increasing the price paid for industrial crops. According to the Chinese press, the prices of chemical fertilizers and ins?cticides were reduced by 9.7% and 15%, respectively; kerosene and diesel fuel, by 20.8% and 9.7%, respectively; and various types of agricultural machinery, by an average of 15.7%. At the same time, the regime increased the price paid for sugar by 15.3% and for oil-bearing crops - peanuts, sesame, rapeseed - by an average of 16.7%. Little information is available on the specific types and grades of commodities affected. The price changes came too late in the year to have great effect on 1971 performance. they are likely to have a considerable impact on rural income in 1972 and a lesrsr impact on aggregate production. 10 CONFIDENTIAL Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 CONFIDENTIAL Food Consumption and Agricultural Import Patterns in 1971 31. The level of consumption varies widely from locality to locality and from occupation to occupation. Communes, production brigades, and production teams in the more richly endowed areas usually are better fed than those in the poorer areas. For example, vegetable farmers outside Shanghai eat better than grain farmers in northern Shensi Province. Energy needs, and consequently rations, vary greatly with occupation. Thus, workers engaged in heavy labor may received as much as 3,000 calories per day, whereas students may receive as little as 1,600 calories per day. In contrast to the urban population, the farmers consume larger amounts of less desirable and nutritionally deficient grains - such as kaoliang at 1 barley - and starchy roots to meet their energy requifements. On the other hand, the farmers consume slightly larger amounts of nutritionally valuable vegetables from their private plots than do their urban counterparts who must purchase such commodities in retail markets. 32. Caloric consumption has remained fairly stable in recent years and did not change significantly in 1970-71 and the first half of 1972. This level, about 2,000 calories per person per day, is adequate to meet the Chinese people's minimum energy requirements. In general, the Chinesr, people can be said to be reasonably well fed. Although the Chinese have set up an efficient rationing system that prevents dangerously low food levels from developing, local food shortages have occurred in areas where weather conditions have been particularly poor. For ins', nce, the summer drought in Central China in 1971 was accompanied by reduced grain rations in that area. Even though the caloric level has not increased substantially in the recent decade, the last few years have witnessed a gradual improvement in the quality, variety, and availability of foodstuffs. This improvement is due to a combination of factors, especially the permissive attitude toward private plots and petty trade, the steady rise in supplies of traditional specialty foodstuffs, and steady increases in real incomes. Grain Imports 33. Over the past 18 months, Canada has been the sole foreign supplier of wheat to the PRC. In 1971, China imported 3.1 million tons of wheat, the lowest amount imported in any year in the last decade. In 1972 the Chinese have contracted to import from 3.75 million to 4.0 million tons, and Peking has already arranged to import 750,000 tons in the first quarter of 1973. 34. Chinese grain imports have been used to maintain rations in northern cities and thus to reduce the domestic strain of procuring grain for grain-deficit areas. In 1970, Peking claimed that the chronically grain-deficit provinces of Shantung, Hopeh, and Honan - the provinces that CONFIDENTIAL Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 CONFIDENTIAL normally supply much of the grain for these cities - were basically self-sufficient in grain output. This claim was repeated in 1971, although qualified as having "initially" been accomplished. These claims, when read between the lines, mean that the problem had been only partly solved. Nonetheless, the government apparently thought that imports could be safely reduced in 1971, particularly since the harvests were expected to rise above the record level of 1970. In addition, Peking was determined in 1971 to increase exports and to rein in imports to redress the trade imbalance created in 1970. 35. The higher wheat imports of 1972 may be the result of several factors: A lower than expected harvest in 1971. Acreage shifts. The regimes's decision in late 1971 to increase the price paid to farmers for some industrial crops and the prominence given to increasing industrial crop output in 1972 may be the harbinger of a shift in acreage from grain crops to industrial crops. Changed trade outlook. PRC export performance in 1972 has improved and the regime may have decided that grain imports can be increased to more normal levels. Consumer welfare. Increased grain imports could also be a reflection of the increased attention being given to consumer welfare in 1972. Wages are being raised for selected categories of workers; farmers apparently are getting bigger shareouts; and discussions of improvements in the "livelihood of the masses" are becoming more common in the press. Non-Gran Imports 36. The poor performance in industrial crop production in 1971 helps to explain the current Chinese interest in increased imports of Come of these products. For instance, the Chinese have resumed cotton imports from Mexico - after a lapse of six years and are now negotiating with Brazil for cotton imports. On the other hand, the recent increase in Chinese imports of sugar from new suppliers is probably more a reflection of the decreased availability of Cuban sugar than evidence of low levels of domestic sugar production. 12 CONFIDENTIAL Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 ' Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 CONFIDENTIAL Prospects for 197 2 37. Preliminary indications are that the spring crops of 1972 should be at least average. Precipitation in most of the winter wheat gr_'wing area has been above normal throughout most of the growing season. Thus, winter wheat output should exceed the poor harvest of 1971. In the south and southwest, early spring drought has appeared and, to some extent, has delayed or prevented the transplanting of early rice. It is too soon, however, to judge the severity of this drought and its effect on crop production. 38. As for agricultural policy, in February 1972, Peking strongly reiterated the pragmatic policies of the past few years. Apparently, the regime is not going to let its priority concern with military-industrial expansion override the need for increased investment in agriculture. The price reductions for technological inputs and the higher procurement prices for industrial crops exemplify a concern for increased production in 1972. In particular, the increased prices paid for industrial crops should stimulate their production. In the cases of sugar cane and jute, acreage has been expanded, largely on marginal hillside land. The new incentives for growing industrial crops increase the pressure for shifting acreage from grain to industrial crop production. The price changes should be seen ? also as the means for financing the increased flow of chemical fertilizer and agricultural equipment currently moving into the countryside and for seeing that the inputs go to the most successful production units. 39. Individual incentives to produce also appear to be somewhat stronger this year than in the past. In 'addition to continued regime tolerance of private plot cultivation and petty trading activity, there are some indications that the guidelines governing distribution at harvest time have been loosened to give the farmer a larger return for his labor. Current press discussions of the workpoint system -- the basic system for 13termining peasant remuneration - emphasize payment according to work done and tend to downplay such criteria as payment determined by political attitude and payment according to reed. Similarly, there are also signs that workpoint scales for auxiliary farm labor - women and youth - are being made more generous than in the past. In sum, the fundamental policy of "taking grain as the key link" remains in force, and, given these improved incentives and good weather, both gain and industrial crop production could increase. A Farther Look Ahead 40. In this memorandum, the past decade in agriculture has been characterized as a period of higher investment, pragmatic policies, and increased production. Ideological trumpeting, especially during the Cultural Revolution (1966-69), raised the specter of renewed rural radicalism, yet the private plots remained essentially undistributed. The present pragmatic, CONFIDENTIAL 13 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 CONFIDENTIAL incentive-oriented policies continue to contradict Communist ideology. Thus a new dose of radicalization always rertiains a possibility. As of the moment, however, such policies as private plot cultivation, private hog raising, and side-line light industrial activity seem well entrenched. A revival of radicalism in agriculture in 1972 seems highly unlikely. The possibilities for such a revival will increase as the PRC moves into the mid-1970s, largciy because an aging leadership must soon be replaced with unpredictable results. 41. Assuming average weather conditions, prospects for a continuation of a 2% to 3% growth rate of agriculture during the next few years are good. The potential for further increases in chemical fertilizer and other industrial inputs is' excellent. The industrial facilities that supply the increased inputs to agriculture over the next' few years are now being commissioned or are at advanc.-d stages of construction. The ability to extend modern water management techniques to create additional high-yield acreage will continue. Nonetheless, it is unlikely that grain production will increase dramatically in the next few years. Greater contributions from agriculture to overall economic development - for example, a sizable increase in supplies of raw materials for light industry and an expansion of agricultural commodities for export - are also ur.likely to be forthcoming in the near future. For one thing, there is a lack of emphasis on developing high-yield seed varieties - i necessary condition for such increases. This fact - plus the steadily increasing costs of developing high-yield areas - makes dramatic increases in agricultural production unlikely. Finally, the new Maoist-style system of education emphasizes the immediate and the practical at the expense of the future and the theoretical. A revival of long-term agricultural research would be a signal that Peking is alert to the agricultural development needs of the mid-1970s. 14 CONFIDENTIAL Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 CONFIDENTIAL Provincial Claims for Grain Production in 1970-71 As indicated in Table 3, the 1971 grain production in 15 provinces, normally responsible for about three-quarters of the total annual grain production, exceeded 1970's output. Since the Chinese are apparently reluctant to report decreases in production, it is presumed that the remaining provinces suffered decreases in production. In 1970, in turn, 18 provinces, normally responsible for about 80% of the total grain production, claimed that production increased over 1969, and, in addition, that 12 of these provinces - normally responsible for about one-half of the total annual production - had increased grain production by 10% or more. Here again, it was assumed that in the remaining provinces production had been down over the previous year. Even with these assumptions, these percentage increases suggest that total grain production in 1970 and 1971 may have been higher than our estimate. However, there is reason to believe that these figures represent the Chinese preliminary estimates and that the final figures, for the most part, are apt to fall short of these estimates. Thus in 1571, seven provinces claimed an increase in production over the previous year without claiming a record despite the fact that in the precious year these provinces had claimed a record. This logical inconsistency strongly suggests that the 1970 results had subsequently been revised downward without public acknowledgement of these revised results. In a few instances, revised figures were published that were higher than the preliminary estimate. Thus a late revision of the results of the 1971 crop in Sinkiang changed the preliminary statement from an "all-round success" in agricultural production to a "10% increase in grain" production. This suggests that revised results are generally published only if they are an improvement over the preliminary announcement. CONFIDENTIAL is Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9 Shansi Shensi Sinkiang Shantung Fukien Anhwei Hunan Kweichow Szechwan Kiangsu Yunnan Hupeh Kwangtung Honan Kwangsi Chekiang Kirin Xiangsi Kansu Inner Mongolian Autonomous Pegion Hopeh Heilungkiang Tsinghai Ningsia Liaoning Percent of China's Normal Total Grain output 23 2..4 0.9 6.9 2.3 6.5 6.3 2.2 12.9 6.6 3.5 5.8 7.0 6.1 3.3 3.8 2.4 3.9 2.5 1.6 3.4 3.5 0.3 0.3 3.3 100.0 Output 16% over that of 1970 Output 10% over that of 1970, record crop Output 10% over that of 1970 Output 8% over that of 1970 Output 5% to 10% over that of 1970 Output 7% over that of 1970 Output 10% over 1969, record crop No report No report Gross output of grain and cotton was a record Output 30% over 1969 record crop A record crop Output 5.2% over that of 1970 A record crop Output 3.0% over that of 1970, record crop Output more than 10% greater than 1969 Output exceeded previous record Output 10% over 1969, record crop Output was highest yet Output 20% over 1969, record crop Best grain harvest this year Output 20% over 1969, record crop Output and yield best ever A record crop over 1969, record crop Output greater than 1970 A record crop Output greater than 1970 Output 14% over 1969, record crop Good output of grain and oil-bearing crops Output 10% over 1969, record crop Fairly good agricultural harvest a/ Output 30% over 1969, record crop Good harvest a/ 33 (of 85) hsien fulfilled target Good harvest a/ No report Comparatively good harvest Very close to that of 1970 Good agricultural harvest a/ Relatively good harvest a/ Grain yield increased compared with 1970 No report All round rich harvest Output 10% over 1969, recurd crop Record yield and production Output 20% greater than 1969 No report Output 30% over 1969, record crop Sanitized Copy Approved for Release 2011/01/18: CIA-RDP85T00875R001700030107-9