STAFF NOTES: CHINESE AFFAIRS

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CIA-RDP86T00608R000300080011-0
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RIPPUB
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T
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35
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December 19, 2016
Document Release Date: 
June 1, 2005
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11
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Publication Date: 
May 12, 1975
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REPORT
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25X1 Approved For Release 2005/06/09 :CIA-RDP86T00608R000300080011-0 Approved For Release 2005/06/09 : CIA-RDP86T00608R000300080011-0 25X1 Top Secret ~4Q~~f a04C~ 9 0 0 Chinese Affairs 25X1 Top Secret 15 6 25X1 May 12, 1975 Approved For Release 2005/06/09 : CIA-RDP86T00608R00030008 - 25X1 Approved For Release 2005/06/09 : CIA-RDP86T00608R000300080011-0 Approved For Release 2005/06/09 : CIA-RDP86T00608R000300080011-0 Approved For Relea CHINESE AFFAIRS May 12 , 19 75 25X1 25X1 25X1 Leadership Appearances: A Non-Pattern. . . . . . 7 May Day and the Military . . . . . . . . . . . . 10 May Day in the Provinces . . . . . . . . . . . 13 Chiang Ching: Both a Legalist and a Confucianist Be . . . . . . . . . . . . . . . . 16 China: Tankers 1.9 Indian Relations: Even More Sour . . . . . . . . 20 Another Hat for Chen Hsi-lien. . . . . . . . 25 ANNEX: China's Grain Import Policies . . . . . . 27 CHRONOLOGY . . . . . . . . . . . . . . . . . . . 34 25X1 Approved For Rele 25X1 Approved For Release 2005/06/09 : CIA-RDP86T00608R000300080011-0 Next 5 Page(s) In Document Exempt Approved For Release 2005/06/09 : CIA-RDP86T00608R000300080011-0 Approved For Releas$ 25X1 Leadership Appearances: A Non-Pattern F 1 A series of major events in Peking--the Kim Il-song visit, rallies in support of communist vic- tories in Cambodia and Vietnam and May Day--brought most of China's leaders into public view. Not all leaders appeared at all events, however. Some failed to appear at events they would normally be expected to attend, and others appeared in unusual capacities at other festivities. Among the more surprising inconsistencies was the non-appearance of Politburo member Chang Chun- chiao at the festivities surrounding Kim's visit and both the Cambodia and Vietnam rallies. Chang has often assumed hosting duties on behalf of visit- ing foreign communist delegations, but his absence from all functions associated with visiting com- mtinists raises questions about whether he has re- linquished this role in light of .".,is recent accumu- lation of other duties. Chang does not appear to be in any political trouble. He did appear on May Day, and his art,.cle in last month's issue of Red Flag continues to be cited frequently in the pro- vincial propaganda, sometimes without reference to the earlier article by fellow Politburo member Yao Wen-yuan. Yao emerged in an unusual role during the Kim Il-song visit, as the second-ranking participant in some of the substantive discussions between Kim and Vice Premier Teng Hsiao-ping. While Yao has often hosted visiting journalists on his own, this was the first time he is known to have taken part in substantive talks with a visiting head of state. Yao appeared at all of the recent events in the capital, somewhat overshadowing the nominal third man in the leadership, Wang Hung-wen. May 12, 1975 25X1 25X1 Approved For Releasb 2005/06/09 : CIA-RDP86T00608R0003b0080611-0 Approved For Relea Wang was not present for Kim 11-song's arrival or departure, and, although he was the highest ranking Chinese leader at both banquets during the Kim visit, the speeches for the Chinese side were given not by Wang but by Teng Hsiao-ping. Wang's protocol ranking in the leadership obviously does not automatically entitle him t, an important role in such major events as the visit of Kim I1-song. Moreover, despite his presence at both the Cambodia and Vietnam rallies, it was Defense Minister Yeh Chieng-ying, rather than Wang, who delivered the speeches. The appearances of Chiang Ching seemed almost arbitrary. She was on hand to greet Kim Il-song but did not see him off. Although she rarely at- tends state banquets, she was present at the banquet for Kim but did not attend Kim's reciprocal banquet. She attended the Cambodia rally but not the Vietnam rally. Most startling of all she was the only major leader, other than Mao and Chou, to miss May Day. Her absence was made even more glaring by the pre- sentation, given by some ten thousand cultural workers, of songs from the operas produced under her auspices. Radio Peking called the presentation "by far the biggest festival performance in Peking," begging the question of Chiang Ching's absence., Taken together, the recent events in Peking and the leadership appearances associated with them may give some claes as to the relative importance of certain officials. Chiang Ching's political standing, as usual, remains hazy. Teng Hsiao-ping is clearly important, perhaps far more so than his sixth-ranking position in the leadership would sug- gest. By contrast, young Wang Hung-wen's performance to date does not seem to equal his standing as third in the leadership. The other members of the "second generation," particularly Chi Teng-kuei, who himself was tied up with the visiting Belgian prime minister May 12, 1975 25X1 25X1 Approved For Releake 2005106109 ? coin-RfPRATOO ORPOO 300080011-0 25X1 Approved For Relea but managed to appear at all the other events, are taking on greater responsibilities. Although this pattern has been discernible since the National People's Congress in January, the most surprising development is the role of Yao Wen-yuan during the visit of Kim Il-song. Yao has not seemed to figure greatly in the growing role of the second genera- tion, but his future activities may merit close watching. 25X1 May 12, 1975 25X1 Approved For Relea0e 2005/06/09 : CIA-RDP86T00608R000~00080011-0 25X1 Approved For Rele May Day and the Military I Leadership appearances on May Day suggest that while party-army relations remain strained, civil- ian leaders in Peking and regional commanders have reached a certain accommodation. The campaign to strengthen the proletarian dictatorship, which has so far emphasized social order and production goals and has not been used as a means to attack the mili- tary, almost certainly appeals to the vast majority of military men on both counts. While provincial turnouts are incomplete, and some missing leaders are soldiers who hold party posts, most top ranking military men have been accounted for. One previously absent leader who had been heavily criticized, former Canton Military Region political commissar Jen Ssu-chung, h: ,s apparently been given a high ranking military post in the Tsinan Military Region. The effort to ease military men out of party and govern- ment posts continues, and with some success, but Peking's tactics are quite different than they were during the campaign to criticize Lin and Confucius. At that time, regional commanders were the targets of s!--were criticis.n, and seven of them were stripped of their provincial party posts in one bold stroke. The current standing of the military is typified by the appearances of two military region commanders who are also politburo members. Shenyang commander Li Te-sheng led the turnout in Liaoning. Li, who lost his post as head of the PLA's General Political Department last year and was dropped from the politburo standing committee this year after running into serious trouble during the anti-Lin, anti-Confucius campaign, had been conspicuously absent from large turnouts in Liaoning in April to greet Kim Il-song on his arrival and departure from China. Li's political standing remains shaky, but he apparently remains Shenyang Military Region commander. May 12, 1975 Approved For Ro 25X1 25X1 Approved For Rele se 2005/06/09 : CIA-RDP86T00608R 00300080011-0 25X1 Canton Military Region commander Hsu Shih-yu, who was reported to be visiting a "grassroots unit" on May Day, was the only one of the provincial-based politburo members who did not head a turnout ir_ his provincial capital. The peculiar treatment accorded Hsu se.;ms a sign of political weakness and serves to emphasize his separation from the locus of political power in the region. However, the party first sec- retary of Kwangtung was also absent from Canton, which tends to cloud the meaning of the turnout. Other recent indicators are consistent with Peking's carrot-and-stick approach toward the mili- tary. Two provincial military figures who weri heavily criticized last year and seemed likely purge candidates continue to appear in Peking. Han Hsien-chu, who was rotated from Fukien to Kansu, and Hsieh Chen-hua, who hea'ed Shansi until a play produced there was branded a "poisonous weed," were listed among members of the party central committee appear- ing in the capital. Neither leader has appeared in his province in some time, but they have not yet been replaced, either. Several military men were publicly rehabilitated or given active pasts for, the first time on may 1. Fu Chung-pi, who was Peking Garrison commander until his fall in the 1968 purge of acting chief of staff Yang Cheng-wu, is now listed with ranking officers of the Peking Military Region. A continuing relation- ship with Yang, who is now a deputy chief of staff, cannot be established, but Fu certainly has no strong ties to his superior, Peking Military Region commander Chen Hsi-lien. The appointment appears to be another example of the civilian leadership using checks and balances to control a politically sensitive military command. Another professional soldier who fell early in the Cultural Revolution, former artillery commander Wu Kuo-hua, has also returned to active May 12, 1975 25X1 Approved For Release 2005/06/09 ? r_in-RnP86T00608P000300080011-0 Approved For Rele ranks, while Tan Cheng, who was the head of the General Political Department and a vice-minister of defense in the 1950s, was listed as "attending" the festivities. 25X1 Pressure on the military nevertheless continues. Wu Hsiu-chuan, a former head of the party's International Liaison Department, is either a deputy chief of staff or, more likely, a deputy director of the General Political Department. In either case, Wu seems to continue the trend of placing putative civilians in high military posts. Moreover, domr'stic propaganda seems to'be telling PLA men that they will no longer receive preferential treatment in the form of urban employment upon demobilization. Numerous articles also continue to emphasize that local military leaders are to support their party and government counterparts at all times. May 12, 1975 Approved For Re 25X1 25X1 25X1 Approved For Releas 00300080011-0 25X1 25X1 May Day in the Provinces May Day turnouts in the provinces were con- siderably larger than a year ago when the anti- Confucius campaign was raging, but less impressive than those for National Day (October 1st) when a major effort was made to project an image of sta- bility and unity. Accounts of this year's festivi- ties are notable principally for their blandness. There were no major surprises this year. No new first secretaries were named, nor were any purges revealed. Five provinces--Anhwei, Heilung- kiang, Hupeh, Liaoning, and Shansi--still do not have a publicly identified first secretary, and civilians continue to head 16 of the 29 provincial- level units. Military men lead the other eight. Anhwei, Chekiang, Fukien, and Kiangsu--four of the more troubled provinces--failed to publish detailed accounts of their local celebrations, indicating that the situation remains unsettled there. Heilungkiang, whose first secretary appar- ently :eras purged recently, also failed to provide a name lisc of those in attendance. Yunnan, on the other hand, turned out in force despite its con- tinuing factional struggles. A few provincial leaders appeared in Peking. Most notable were Jen Jung and Lu Jui-lin, the bosses of Tibet and Kweichow, respectively. Jon may be discussing Tibet's long-standing economic and supply problems with officials it the center. Lu may be in Peking to discuss Kweichow's persistent factionalism, although rumors of poor health neces- sitating trips to the capital for medical treatment continue to surface. The strangest turnout was in Kwangtung where Chao Tzu-yang, the party boss, Hsu Shih-yu, Canton May 12, 1975 25X1 Approved For Rele4se 2005/06/09 : CIA-RDP86T00608Rg00300080011-0 ILLEGIB Approved For Release 2005/06/09 : CIA-RDP86T00608R000300080011-0 Approved For Release 2005/06/09 : CIA-RDP86T00608R000300080011-0 Approved For Relea4 25X1 Military Region commander, and Chiao Lin-i, Canton's mayor, all failed to attend the provincial rally. Itsu was reportedly with a "grassroots unit" some- where, but no effort was made to account for Chao's and Chi.ao's absence. There is no evidence to sug- gest that either man is in political trouble. In their absence, Kung Shih-chuan, the second ranking military man stationed in the province, led the turnout. Kung's role is mildly surprising because he was apparently stripped of his provincial party titles as a result of the anti.-Confucius campaign, although he retained his military posts. It was apparently in that capacity--as well as a member of the Central Committee-- that he led the turnout in Kwangtung. The top party figures in Inner Mongolia and Tsinghai also missed local celebrations. As was the case in Kwangtung, no explanation was offered for their absence, and neither man seems to be in political difficulty. Inner Mongolia's number two man did attend the festivities in Peking as a mem- ber of the Central Committee. May Day turnouts indicate that the campaign to study the proletarian dictatorship has had little, if any, effect on provincial leaderships so far. Both national and local leaders have successfully managed to keep the campaign focused on impersonal behavior patterns and away from the s ecific actions of individuals, including their own. 25X1 25X1 this phnse o t tne campaign may be coming to an and, and that criticism of individuals--which could lead to changes in some of the less stable provinces--will be in ortly. I 25X1 Approved For Rele May 12, 1975 Approved For Rele 25X1 Chiang Ching: Both a Legalist and n Confucianint Be Although the anti-Confuciun campaign has faded into the background, nome discunnion of the histor- ical struggle between legalints and Confucianists continues to surface in the propaganda. Two such articles recently received in Washington acorn to take opposing views of Chiang Ching. Last year, Chiang Ching's supporters appeared to make a cane for her to be chosen an Mao's nuc- censor by painting a favorable picture of ?mprenn Wu, generally regarded an a terrible ruler. The spruced-up image of the emprena, suddenly called a "legalin:," wan countered by wall posters that attacked Empress Wu and linked her directly to Madame Mao. Chiang Ching's supporters evidently tried again in early January with another article on the virtues of the "legalist" empress. The timing of the article, just after the party central cormnittee had completed a new slate of government officers that omitted Chiang Ching, may be significant. The article smacks of some vengeance over the obstacles Impress Wu/ Chiang Ching had to overccme to win positions of power. In addition to repeating the earlier theme that Empress Wu ruled China well for many years after her husband's death, the article made some specific claims that seem to resemble more recent events. Striking what appeared to be a rather vindictive note, the article lashed out agkinst the court elders who objected to the emperor's marriage to Wu and who vigorously de- fended the emperor's current wiio vn one who "should not be divorced lightly." The pansar,? seems to refer to the controversy nuriounding Mao'ts marriage to Chiang Ching, which many party officials opposed, and their support for his highly respected wife, Ho May 12, 1975 25X1 25X1 Approved For Rel Tzu-chen, who had made the Long M.!rch. in its do- fenna of Wu, the article noted the emperor wan at- tractod to her because, among other things, she was "well versed in literature," apparently an allusion to Madame Mao's cultural aspirations. The article also complained that those in power, inclucing the court "secretary-general" and some who hold important vernment positions, constantly conspired against her. Upon assuming the throne, the art,l,cle noted that Empress Wu removed 36 such officials, including the prime minister. These actions were portrayed in the article as praise- worthy, legalist policies. By contrast, an article in March on the struggle between Confucianism and legalism complained bitterly that the Confucianists used opera to attack the legalists, distort historical facts, and advance their own cause. Although the article was cant in historical terms and the operas attacked are ancient ones, the complaints could easily apply to the model operas created under Chiang Ching's guidance. The article claimed that the operas glorified certain Confucianist figures, whose names were widely used in the anti-Confucius propaganda last year to represent Lin Piao, and eulogized historical generals who advocated policies of "national betrayai." Chiang Ching's operas, in fact, glorify some military men a;to undoubtedly were originally intended to represent Lin Piaoo, and several of her operas glorify the military in general. Last year's anti-Confucius propaganda, inter alia, accused not only Lin but some regional military commanders of harboring traitorous ideas. The article noted that none of the old operas praised the major legalist figures and that one, "The Stubborn Prime Minister," even attacked a May 12, 1975 25X1 25X1 Approved For ReIo respected legalist. One of Chiang Ching'n operas is open to similar charges. Perhaps nomewi't akin to "The Stubborn Prime Minister," it not, only does not praise Premier Chou En-lai but actually appears to denigrate him and portrays him an "stubborn." Lent there be any doubt that the discussion of ancient operas has current relevance, the article accuses "Lin Piao and company" of using the Confucian practice of producing operas an "monuments" to themselves. Any operas created after Lin gained power in 1966 in fact were done no under Chiang thing's tutelage. Consequently, the article's criticism of operas created by Lin "and company" can only refer to Chiang Ching's model operas. Although the article lauds the "revolution in Peking opera," it attributes this not to Chiang Ching but to "the proletariat." It concludes with ritualistic praise for the model operas but calls for "conti,aued effort" to root out Lin Piao's influence, particularly the distortion of history, in the cultural sphere. 25X1 May 12, 1975 25X1 Approved For 25X1 Approved For Relea China: Tankers Poking in making a major effort to expand its international tanker The fledgling float-- 600,000 dead weight tons acquired since mid-1974 for more than $150 million--could reach 1 million tons by the and of the year. 't'ankers account fo.: about 00 percent of the international merchant fleet total tonnage purchased during the first four months in 1975. By world standards, it in a small float. The newly acquired tanker float will carry an increasing share of China?s growing petroleum ex- ports. Crude oil deliveries totaling nearly 9 million tone are scheduled for this year--8 million tons of it to Japan--of which the Chinese may carry as much an one third. The fleet has already car- ried one million tons of crude to Japan since July. Chinese tankers will also participate in deliveries of 650,000 tons to the Philippines, with chartered tankers carrying the initial consignments. May 12, 1975 25X1 25X1 Approved For Relea 0300080011-0 Approved For Rele 25X1 Indian Relations: Even More Sour Sino-Indian relations are likely to be quite frosty over the next few months, but the Chinese have not closed the door on eventual rapprochement. Poking's verbal reaction to what it sees as Indian moves to eliminate the remaining vestiges of Sikkimose autonomy has been strong. In the past. several weeks, Sikkim's monarch has been removed from office with the assistance of Indian troops, and the parliament in Now Delhi has passed a resolu- tion approving statehood for Sikkim. In a government statement issued on April 29, the Chinese bitterly denounced India, charging that it engineered the monarch's removal and that the parliament's decision is simply the "legalization" of Sikkim's annexation. This is the first time in nearly two years that Peking has expressed its views through a government statement, and it represents the highest level criticism of India since the India- Pnkistani War of 1971. Poking's statement prompted Now Delhi to issue one of its own, which accused the Chinese of interfering in India's internal affairs. The language in the Chinese statement is the strongest used ''.ince Indian moves in Sikkim began to attract Peking's attention last summer. In this regard, the statement dwelt at greater length than past commentaries on Indian "expansionist" ambitions in South Asin. As might be expected, the Chinese have ruled out--at least for the present--any improvement in Sino-Indian relations. Chinese diplomats are now saying privately that Vice Premier Chen Hsi-lien's friendly overtures toward the Indians in February carried no special significance. May 12, 1975 25X1 25X1 Approved For Rel CIA-Rut-86 I 000300080011-0 Approved For Release 2 25X1 25X1 Chinese concern about Sikkim goes beyond the fact that India's strategic position has been strengthened at China's expense. Equally important is the belief that Sikkim is yet another Indian probe designed to test China's resolve to maintain the status cgio in other parts of the buffer region. The Chinese may fear that anything short of a strong reaction could be misinterpreted in New Delhi an a lack of resolve on China's Part. The Sikkim developments were also a bitter pill for the Chinese because of the political context in which they came. Peking has been trying for a number of, months to improve relations with New Delhi. The Chinese must have hoped that aside from serving their long-term interests, friendly over- tures would also work to their advantage in the short term by providing an incentive to the Indians for restraint in Sikkim. New Delhi not only failed to respond favorably to China's overtures but it undertook rapid and blatant actions to incorporate Sikkim. May 12, 1975 25X1 25X1 Approved For Release 2005/06/09 : CIA-RDP86T00608R000300080011-0 Approved For Release Moreover, these moves came shortly after Soviet Defense Minister Grechko's trip to New Delhi. The Chinese are undoubted) suspicious that a new arms deal was concluded n may now ear that India's coolness toward the Chinese overtures and its moves in Sikkim are part of a quid pro quo. Treatment of the Soviets in Chiaa's government statement seems to strengthen this interpretation. The statement goes beyond pr~a iuus comment and labels Moscow the "main threat" to the sovereignty of South Asian countriers and the "most dangerous enemy" of the people of the region. In the past, India and the Soviet Union were held equally culpable for Indian actions. Despite profound unhappiness over Sikkim, how- ever, the Chinese continue to display interest in eventual rapprochement. an-hua that, at prey , ons wi In di, are neither very good nor bad" and that in the long term relations will be "good." --Although Peking protested to the Indians over anti-Chinese demonstrations which came in the wake of China's government statement, Peking did not publicize the issue in an obvious effort to keep polemics from esca- lating further. --During his recent trip to Pakistan, Vice Premier Li Hsien-nien reassured Islamabad of continuing Chinese support in the face of developments in Sikkim, but left little doubt May 12, 1975 Approved For Release 2005/06/09 : CIA-RDP86T00608R000300080011-0 Approved For Release 2 that Pakistan would have to prepare itself for some measure of Sino-Indian rapproche- ment. In this regard, Li urged Islamabad to continue to repair its differences with New Delhi; this, of course, would help to remove stumbling blocks to improved Sino- Indian relations. 25X1 At this point, China's dilemma is how to in- crease its leverage vis-a-vis India without jeop- ardizing hopes for better ties in the future. The optiu.'s are few. For the next few months, the Chinese can be expected to consolidate, to some extent, relations with Pakistan and Nepal. There may-even be some movement toward normalizing ties with Bhutan. At the same time, Peking and New Delhi will probably continue their battle of words while carefully monitoring each other's actions. While Sikkim has done much to fire suspicions between China and India, statehood has gutted the issue as a future irritant. Whether some form o rapprcc ement is possible, after the heat of the issu subsides, will probably rest heavily on Indian behavior in the buffer state region during the next several months. May 12, 1975 25X1 25X1 25X1 Approved For Release 2005/06/09 : CIA-RDP86T00608R000300080011-0 Approved For Re Equally important will be how the Chinese view relations between Moscow and New Delhi. At present, Peking continues to maintain that there are inherent conflicts in the Soviet-Indian relation- ship which will become increasingly apparent. However, China's treatment of the Soviets in its government statement on Sikkim hints at some reservations about this assumption. If India should appear to the Chinese over the next several months to be making political concessions to Moscow in return for military aid--an unlikely course-- Peking may decide that rapprochement is a futile pursuit which hazards more than its promises. 25X1 May 12, 1975 25X1 25X1 Approved For R*Iease 2005/06/09 : CIA-RDP86T0060$ Approved For Rele 25X1 Another Hat for Chen Hsi-lien Peking regional military commander Chen Hsi- lien has added another job to his growing list of responsibilities. The only military man among the newly appointed vice premiers of the government, Chen was identified on May 11 as a member of the Military Commission, the organization through which the party maintains its control over the military. Radio Peking coyly refrained from specifying whether Chen is a "leading member" of the Military Commis- sion or "the" leading member. The distinction is important because he could either be one of several vice chair-,ten of the commission or the ranking vice chairman, a job generally thought to belong to De- fense Minister Yeh Chien-ying. Despite Yeh's presence at the military sports meet, at which Chen's new job was publicly revealed, it was Chen rather than Yeh who gave the opening address. Chen welcomed the participants "on behalf of the Chinese PLA," the only military leader other than Yeh Chien-ying to use those words since the fall of Lin Piao. Chen's speech dwelt on military training and preparedness and made no reference to a political role for the PLA. Chen seemed to clash with moderate leaders in ,Peking when he led an attack during the summer of 1973 on the use of university entrance examinations. He was also attacked by historical analogy during last year's anti-Confucius campaign. Since that time, however, he has performed well in his capacity as vice premier and has shown no recent signs of opposi- tion to current moderate policies. His apparently docile behavior in recent months can perhaps best be explained by the number of new jobs he has been given. He was transferred to Pcki,ng in the rotation of mili- tary commanders at the end of 1973, thereby bringing May 12, 1975 25X1 25X1 Approved For Rel CIA-REWBOTOOOO 000300080011-0 Approved For Relea him to the oenter of political power, allowing him to participate in the national government, and giving him an opportunity--pons.tbly limited when he wan stationed in Liaoning--to be prevent at all Politburo meetings. The range of Chen's current jobn nuggonta that he in one of the most members of the regime. 25X1 May 12, 1975 25X1 25X1 Approved For R4lease 2005/06/09 - CIA-RDP86TOO60BR000300080011-0 Approved For Release 25X1 China's (;rain Import P es F I 5ihce 1961, China has regularly imported latirt quantities of grain to maintain rations in northern cities. Initially, short-term purchases of wheat were made as an emergency measure, following the collapse of the Great ieap forward. Imports became a permanent feature of Chinese policy when it he- came apparent that aciricuitural development wan lagging in the trorth China Plain. In the winter of 1963/64 and again in 1966 long-term (3-year) purchase agreements were signed with Canada and Australia. New investment flowed into agriculture in the 1960x, and by the end of that decade the iovernrent apparently was confident that the gap in grain out- put would soon be clcsed. Upon tt.7 completion or the long-terra agreements with Canada and Australia, Peking reverted to a short-term import policy. in the fall and winter of 1969, the Chinese beoan to contract for grain to satisfy minimum projected requirements and then, if required, planned to sup- plement tiese purchases with short-term purchases the following year. In late 1969, one-year con- tracte were signed with Canada and Australia. in 1970 and again in 1971, China purchased from Canada exclusively, ostensibly because of Peking'a disaatin- faction with Canberra's failure to grant diplomatic recognition. In 1971, grain imports fell to only 3.03 million tons, lean than one half the record 6.31 million tons purchased in 1964 and substan- tially below the trend established over the prior decade. (See table.) Still another turnabout in China's import policy began to emerge in late 1972. Crop pros- pects in North China deteriorated rapidly in the May 12, 1975 25X1 25X1 Approved For Release 2005/06/09 : CIA-RDP86T00608RQ00300080011-0 Approved For Rele t, g ' ?' w ?- .,? a P, ~) f_7 !_) CJ CJ C7 C3 13 P3 9 t,) K (? H, a' Q nl U N ry 1" wr .w ?_e f. 13 ~,V 15 1~3 It _i -0 ff 'y I" " C3 I" ~t r? ' ) IV ..a so ''~ w nt CJ < !:) C) CJ C7 f3 CJ V C) /?') CJ M C) -4 '0 {-` N! ry ..? 01 'lk i' MN'sNn?,')md1TP4 ?1 'o . 4 m A 0 f- tU f'? ON r` .-? m Y O 0 N C) y t] .C ?A 'S w rw d% _s w' n w...! N ry ..? ry '?-. N -4 N -a -4 ON .q ?'t . N d) .-, ..? O. w 40 .r r ? r1 y (5) -4 t? n J1~p yr'10.NO)m0?.O!t7(R)?0 C'M o .4 .4 14* .4 .4 4 4 43 )D)D)p50 50 50 5.0 50'0fNf`f`f`r-r- at 0) O) O) 0) 0) 0% a O) 0) ON 0) 0) O) A 25X1 25X1 Approved For Release 2005/06/09 : CIA-RDP86T00608R0~0300080011-0 25X1 Approved For Relea late summer of 1972, forcing )'eking to peek grain for immediate de l ;very . The timing could not have hpen worse. World supplies of grain for export v;;re the lowest in yearn; deliVorips from Canada-- China's sole supplier at the time--were snarled by a Canadian clock strike, and harvest prospects were uncertain in all major grain exporting coun- tries except the US. In September 1972, the Ch!.- nese purchased 595,000 tons of us wheat through a third country trader as a stopgap until deliveries from traditional suppliers could be resumed. tleginning in mid-October. 1972 the Chinese, following their normal practice, began to purchase grain for delivery in 1973. The initial purchase was for 1.0 million tons of Australian wheat--the first contract signed with that country since 1969-- followed by a contract for 1.7 million tons cf Canadian wheat. Almost before the ink wan dry on these contracts, the Chinese were informed that Australian deliveries would be halved because the harvest was lower than expected, and the continuing dock strike in Canada would also likely force addi- tional cutbacks in deliveries from Ottawa. To make matters worse, inclement weather continued to take a heavy toll of the grain harvest in north and north- cast China. Thus, the Chinese wore forced to turn to the US for a second time, this time for 575,000 tons of corn which was cheaper and more readily available than wheat. By entering the market when international stocks were near rock bottom, the Chinese were forced to scrounge for grain and pay inflated prices. Peking was determined not to get caught short again. In the winter of 1972, the Chinese began to pur- chase grain to cover the maximum rather than the minimum projected requirements for 1973. In late 1972 and early 1973, Peking purchased 13 chemical fertilizer plants from the west; the May 12, 1975 25X1 Approved For Relerase 2005/06/09 : CIA-RDP86T00608FJ000300080011-0 25X1 Approved For Rele Chinese expect to achieve ael, -sufficiency when these plants bpcom fully operable about 1977. To ensure grain imports In the interval before the fertilizer plants come on stream, Peking signed three-year purchase aqreements with Canada, Aus- tralia, and Argentina in late 1973 to buy a total of from 3.0 million to 4.0 million tons annually during 1974-75. These purchases are a upplemented with short-term contracts as needed. The Chinese apparently contracted foi more grain in late 1972 and early 1973 than they could cope with financially or logiaLically. Record deliveries of grain and other agricultural cornn- modities exceeded the capacity of northern ports, especially during the winter months. By November 1973, long lines of ships began to queue up at northern ports awaiting discharge. Some vessels were unable to berth for 2 or 3 months after arriv- ing off the coast of China, a costly oversight con- siderirg the daily demurrage charge for each vessel exceeded $5,000. Poking began to look for excuses to postpone or delay grain deliveries without being forced to pay penalties for contract violation. Poking was especially anxious to force a postponement in deliveries from the US, by far China's leading sup- plier at the time. In October, 1973, Peking began to complain that much US wheat was contaminated with a rare and relatively harmless smut, TCK, and that the moisture content of US corn was too high, thereby causing problems for human consumption. In February 1974, the Chinese rejected several cargoes of US wheat and in April failed to arrange shipping for several cargoes of US corn. The traders suspended deliveries of US wheat until a solution could be worked out. The Chinese refused offers of cancella- tion and also rebuffed offers of consultation until after the port congestion had #ubsided. May 12, 1975 25X1 Approved For Rel+ase 2005/06/09 : CIA-RDP86T00608RP00300080011-0 25X1 Approved For Releas Peking shifted gears in May and June 1974. An agreement wns worked out to resume shipments of US wheat= shipping was provided for US corns and a series of new contracts wore ni(Ined for US, French, and Canadian grain, increasing total purchases for 1974 delivery t} 9.5 million tons. Deliveries of thin magnitude--about 1.0 million tons each month-- would again have exceeded China's port capacity. But another problem had surfaced. The terms of trade had turned against Peking. Total imports were at an all time high whs markets for China's major exports had noftenec,, giving rise to foreign exchange difficulties. Peking's initial reaction was to postpone deliveries. In all, about 2.5 million tons of grain--divided among all of China's suppliers-- wore carried over into 1975. Poking had contracted for US wheat in the winter and early hummer of 1973-74 when international prices were high. In January 19'75, international markets weakened, prices declined, and additional price cuts worn expected. Thus; when the world price dipped below the con- tract price for US wheat in late January 1975, Peking decided to cancel all outstanding contracts for US grain. In all cancellations the Chinese agreed to pay the trader the spread between the contract price and world price on the day of can- cellation. At the same time the Chinese claimed damages for unsatisfactory grain already delivered, reducing actual payments from about $11.5 million to about $650,000. Peking is not likely to abrogate the 3-year purchase agreements with Canada, Australia, and Argentina. However, the agreements were recently modified to provide for split year deliveries, April-March in place of the customary calendar May 12, 1975 25X1 25X1 Approved For Relea0e 2005/06/09 : CIA-RDP86T00608RQ00300080011-0 25X1 Approved For Releas 25X1 Peking's buying intentions beyond 1976 are unclear. It is unlikely that all of the new fer- tilizer plants will be in full operation by 1977 as planned. Thus, China will probably require grain imports until at least the end of this decade. A top Peking trade official recently remarked that China would continue to buy grain for a number of years to come. The Chinese now view the US as a residual source to be tapped only if a string of May 12, 1975 25X1 Approved For Release 2005/06/09 : CIA-RDP86T00608R00p300080011-0 25X1 Approved For ReleasO poor harventn are encountered. However, in view of pant oxparioncen, tradern may be reluctant to provide US agricultural commodition unlonn Poking in willing to agree to qunlity guaranteen above thong rovidod in the standard grain con t ract. 25X1 May 12, 1975 25X1 Approved For Relea~ 25X1 Approved For Release April 17-20 Members of the Soviet border nego- tiating delegation tour several Chinese cit.'os at invitation of the Chinese government. April 19 Chinese and North Vietnamese sign annual border za ilway protocol. April 20 Vice Foreign Trade Minister Chen Chien signs protocol for 1975 trade between China and Mongolia in Ulan April 25 Japanese economic delegation r- rives in China. Director-General of the Japan-China Friendship Association arrives in Peking. April 27 Vice Foreign Minister from El Sal- vador arrives in Peking. April 28 Kuomintang Central Committee meets in special plenary session in Taipei; elects Chiang Ching-kuo chairman and issues manifesto on future party April 29 Japanese Socialist Party parlia- mentary delegation arrives in China. -34- May 12, 1975 25X1 25X1 25X1 25X1 25X1 25X1 25X1 25X1 25X1 25X1 25X1 25X1 parts for visit to North Korea. Chinese friendship delegation de- denouncing India for its Sikkim policy. China issues government statement Mexican trade delegation arrives in China. Approved For Release 2005/06/09 : CIA-RDP86T00608R000300080011-0 Approved For Release 2 April 29 - Shantung holds its Peasants' Con- May 4 grass, becoming th-i ninth province to rebuild this mass organization. April 30 - Mao, Chou En-lai and Chu To send May 1-2 congratulatory message to PRG and North Vietnamese leaders on the fall of Saigon. Tong Hsiao-ping delivers message to Vietnamese Communist em- bassies in Peking. Yeh Chen-ying speaks at rally in Peking attended by Tong and lesser members of lead- 25X1 May Day celebrated with leadership appearances in the parks; Mao, Chou, and Chiang Chin were onl notable absentees. May 4 56th anniversary of May 4th student movement goes unmentioned in national ership. May 1 Trade promotion group from China de- parts for visit to Bahrain. media. May 12, 1975 25X1 25X1 25X1 25X1 25X1 25X1 25X1 Approved For Release 2 CIA-REWBOTOOOOBROO 00080011-0 Approved For Release ~ May 4 - 8 Common Market official Christopher Soames visits China; meets with Foreign Minister Chiac' Kuan-hua and Foreign Trade Minister Li Chiang. 25X1 25X1. May 5 Japanese Socialist Part dele ati n arrives in Peking. 25X1? Chief Soviet border negotiator Ilichev returns to Moscow after three months in Peking. F__ I 25X1 May 8 Economic delegation from Trinidad and Tobago, led by minister of industry and commerce, arrives in China. 25X1 May 11 Chen Hsi-lien identified as "leading comrade" of the part 's Military Commission. 25X1 May 12 Teng Hsiao-ping and Chiao Kuan-hua begin an official visit to France. 25X1 May 12, 1975 25X1 Approved For Release - 00080011-0