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December 12, 2016
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July 23, 1975
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CIA / 0 E R S -- 0 7 5 9 2 .... @a FoBl i i 698~HIA~' E R I A L JUL 75 , CONFIDENTIAL Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 cz4- c9 11'e 14e /-~2--9s Industrial Nations Division Office of Economic Research 23 July 1975 SUBJECT: Briefing Material for Mr. Henry Lee The attached briefing package was prepared for use by Mr. Henry Lee, US Alternate Executive Director, Asian Development Bank. In addition to the written material, Mr. Lee was given a verbal briefing on 23 July 1975 on the South and-East Asian area, including Mainland China. The briefing included both OER and OCI analysts and extended from 9:00 A.M. to 3:30 P.M. Attachment: As stated State Dept. declassification & release instructions on file Approved For Release _ , P86T00608R000600040046-3 Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 Distribution: (S-07592) Orig & 1 - Flenry Lee 1 - D/OER 1 - D/I 2 - St/P/C 1 - 1 - 25X1A (Treasury) OER/I :mae/5804 (23 Jul 75) Approved For Release 2002/02/19 : CI'A-RDP86TO0608R000600040046-3 Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 Briefing Material for Mr. Henry Lee US Alternate Executive Director (Designee) Asian Development Bank CONFIDENTIAL it CONFIDENTIAL Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 TABLE OF CONTENTS CHINA: POLITICAL AND ECONOMIC BRIEFING -- - - TAB A INDONESIA: RECENT CHANGES IN FORTUNE - - - - - - TAB B PHILIPPINES: RECENT ECONOMIC PERFORMANCE AND OUTLOOK - - - - - - - - - - TAB C SOUTH KOREA: ECONOMIC STATUS REPORT - EAST ASIA: SELECTED BRIEFING NOTES TAB D TAB E PACIFIC BASIN: E-EXAMINING EcooNoiic V BRENDS - ??--- ------- TABF Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 Approved For Release 2002/02/19 :.CIA-RDP86T00608R000600040046-3 Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 40 J* Political and Economic Bricfing the People's Republic of China I. The Political Situation in the People's Republic of China 3I. The Chinese Economy Approved For Release 20022/19. CIA-RDP86T00608R000600040046: 3 Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 At his age, however, Teng is an interim successor at best. Behind him are several competent officials in their 40s, SOs, and OOs who were also given important jobs- last January. The State Council that was a ppointed in January consists primarily of those and other officials of moderate ix?rsuasion. Several are known proteges of Chou. Approved For Release 200,2/02/19:,CIA-RDP86T00608R000600040046-3 ? 1. The Current Political Situation in the People's Xcpublic of China Peking in recent months has devoted primary attention to putting its domestic house in order, a precondition for carrying out its stated goal of building a Modernized Chin:i by the end of the century. Repeated calls for unity and stability suggest that China's leaders are trying to put b.hind tl:ent the personal and political animosities that have plagued the leadership for the past atinc years and have slowed economic development. Political instability over the last several years has contributed to an erosion of public confidence in China's leaders. This has been especially true of local officials, who have been reluctant to carry out Peking's orders for fear of being caught in a sudden shift in the political line. Major party and government meetings held last January emphasized the unity theme and, more importantly, laid the grq,undwork for a relatively orderly succession to the current aging leadership. China's current leaders are essential) the same group that has riled the country since the Communists came to power in 1949. As none of these people can be expected to survive for more than 10 years, a priority need is the grooming of younger leaders who are capable of directing China's, economic development program for the next 25 years. The succession question took on greater urgency last summer with the hospitalization of Premier Chou En-lai who is generally regarded as the architect of China's current domestic and foreign policies and the leader of the moderate coalition in the party. Chou remains in a rest home but seems still to be in overall control of affairs of state. The supervisioti of day-to-day affairs, which was Chou's primary task for more than 20 years, has now been turned over to 70-year-old Ten,-. Hsiao-ping. At the meetings in January, Teng was named first deputy premier and is Chou's apparent successor. Teng seems to be in general agreement with Chou En-tai's policies and is not ? expected to make any major changes if and when he becomes premier. Ten` has ? a well-carved reputation as a strict disciplinarian and an able and experienced administrator. At the meetings in January, Ten.- was named to top positions in the party and the 'national military hierarchy. the; eby ,giving hint important posts in China's three major bureaucracies - the party, government, and military. The extreme left win- of the party, which is headed by Mao's wife, Chiang Ching, was all but excluded from the new government and has lost influence in party affairs as well. The power of 'the military, which was the dominant political force until a few years ago, has also been sharply reduced. Civilians have been named to several top military posts, and r1any of the most influential military men in the provinces were transl'erred away from their power bases and sent to new areas where they have been denied top party and government positions. Pelting had reason to believe that some of these military men may have been involved in an alleged coup plot in 1971. Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 As Peking builds toward the future, the position of China's top leader, Mao Tse-tung. has come increasingly into question. Mao has been out of Peking since last summer, his longest absence from the capital since coming to power. Recently he has stopped meeting foreign visitors, and there are signs that Chinese officials are beginning to take a critical view of many of Mao's former policies. Sonic people seem to hold Mao responsible for the political. instability of recent years. Although Mao is on record as endorsing the unity and stability theme, his physical separation from the rest of China's leaders. raises questions about his actual view of current developments. Mao is kept fully informed of all major developments, but the Chairman's prolonged absence from the capital suggests that lie may not fully endorse some recent decisions. 2 Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 ......ISl.FS:4:.JJ:a~'....;/1Jn].Mry.lVbi..f.rr~w...l i.n~.-+Liuil~r:.aci.i~..~.s.~..rrrr:alur.u..n ~.w ~L?wr..~a.w.+r..:-,w....?.. _ _.rr..........?.u.......~.~.. ~._. _..i..~__. If. The Chinese Economy Premier Chou inn-lai in his'.governnrent work report to the National Peoples Congress last January surveyed the mixed performance of the economy in 1974 ,and sub~eested that the leadership expects economic growth to b: gradual for sonic time. A1thou~Jl Chou provided few statistics on either planning or performance, we believe that the Chinese economy grew in 1974 by only 3% - down from almost 10' in 1973. Growth in industry slowed to 4%, from a respectable 12ic in 1973, and agricultural output barely matched the increase in population (about 2nc). Among the factors holding back industrial growth in 1974 were: o the persistence of imbalances among the extractive, processing, and finishing industries, hig1 lighted by shortages of coal; o sporadic work stoppages, lowered worker morale, and reduced productivity created by the anti-Confucius campaign; and o the overburdening of the transportation system, particularly the railroads. The sharpest decline occurred in steel output, which fell by 617o in 1974 to about 24'' million tons. On the positive side, the petroleum industry continued its strong growth, with a 2051c increase in cnide output to the 65 million ton level during the year, while the production of electric power, tractors, chemical fibers, and cement also showed increases. Agricultural growth during 1974 was adversely affected by generally unfavorable weather for winter wheat and for fall-harvested grains. Grain output exceeded the 1973 level of 250 million tons. rising to about 255 million tons. Nevertheless, grain production in 1974 was clearly less than the authorities hoped for. Imports of grain, which were 7 million tons in 1974, will continue, with 5.4 million tons already slated for delivery in 1975. In foreign trade, total exports rose last year, with the rapid expansion of earnings from oil exports more than offsetting the impact of shrinking world markets for traditional Chinese exports. Imports grew even faster as worldwide inflation pushed up China's import costs. China's. hard currency trade deficit increased from the 1973 level of S370 million to perhaps S13 billion in 1971, in part from heavier use of medium-terns credits to finance whole plant imports. Approved, For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 '~- ....v...;..:l.:.a.. .- -. -_ Chou reaffirmed the development priorities of agriculture. light industry, and heavy industry which have prevailed since late 1972 and reiterated Chinese interest in expansion of trade relations with the non-Commnmunist world. The reduction of economic ministries and commissions - from 40 to 25 and from 12 to 3, respectively - announced at the \l'C and Chou's statement that the PRC is drawing up a ten-year plan in addition to five-year and annual clans suggest that the dcgrec of centralized planning and management of the economy is to increase. For Release 2002,/.02/19. ,.CJA-RDP86T00608R000600040046-3. Chou also singled out the Period of the Fifth Five-Year I11thn (1976-SO) as crucial to PRC attainment of economic "front rank" status in the world by the end of the century. The basic problem remains that of lifting the long-tern rate of grain production above the rate of population growth. Solution of this problem throw.}t expanding industrial inputs -to agriculture - including inputs of foreign technology - is clearly implied in Chou's speech. In sum, Chou En-lai appears to have charted a course of carefully planned but slow growth for the economy over the next 1.5 years. The leadership is in transition and. Even the PRC's past experience with radical turns in economic policy, the present moderate approach may bb difficult to maintain. Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 China: GNP, industrial Production, and Agricultural Production China: Grain Production and Population Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 h P M v s n N 00 O V N E. a t N ~ v v N fn V M N N vovn~ N N 50 V ryooV, N7 f? M N N r- no w N Ua, M Os M V A N P n N ~? ?? ap N N M ' M N M N 0~0 fn N N .~?? n 00 V4 O cq. N qov, M ti O N M fr O N 00 N - N m N N M N O .-. vt ~ 00 O O o M p D ^ 10 . ; n . N N N 0 0 Co O N OD .. n M 00 N co 0 0 M N 0 N - w CO , T O' ? N sa b N a N - w a M .r O O~ M M N N ~ . . . .. O ??. &. N 0 0 b N ot~ 00 N r+ N A 00 r A b tO Op q N -+ N O - sT 0N0 I0 P h M N 0 ... .V-. 00 a a OOO N 'f N r: q x- z z 00$ w .-. N n8n :2 F v;NiN N N 000 0 N O O N r ? n a~ V IV O' v1 V N O N V N N 10 M 00 pp ~D 00 O OR vMi ~o .b ... ?'O Mf fV .+ V N O, h '.G N V V% N N f` A ' b v M O O V t'f %n sO b N N N N t% d I-P.0 00 O so n N N H.41- N V N .... 00 N a O v 00 M N N oo y~ N f4 V t+1 N E 'J u 8 ai r - o' E SI2E k~i-w4:- .. t2 .2 % M 1O N ~o 0Sja r avv Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 Ill. China's Foreign Trade in 1974-75 J 10iligli is in 1974 China's forei;tn trade boom fell victim in 1974 to the growing problems of the world ec,*nomy. Total trade increased by about 25;%, to roughly S12.5 billion. well 6.low the 67',. increase in 1973. Most of the increase is attributable to hiz-her prices, with little or no gro~.tii in volume. Worldwide inflation pushed tip China's import bill while the economic slowdown in the West cut demand for Chinese exports, resulting in the largest trade deficit ii China's history -'perhaps S I.3 billion with the non-Communist world, and despite a surplus with the Communist world, about SI billion overall. Despite these difficulties, China's balance of payments is not in crisis. Reserves are well in excess of the trade deficit, the level of foreign debt is manageable, and Peking's credit rating is excellent. China began. taking steps to relieve the financial squeeze last fall. Contracts for agricultural products were deferred or canceled. Fertilizer deliveries were postponed. Peking also increased its use of short- and medium-term credits. Trading Partners Trade. with the non-Communist countries posted the largest gains, accounting for almost 85% of China's total trade. Imports from the developed West shot up to slightly above S5 billion from S3.4 billion in 1973, largely due to increased purchases of agricultural products and machinery. China's deficit with the developed countries was roughly S2.9 billion. Sino-Japanese trade jumped 50%, to S3.3 billion. China's imports, boosted by sizable deliveries of machinery and equipment, exceeded exports by more than $800 million. China's exports of 4 million' tons of cnide oil worth. about S380 million more than offset the decline in its' traditional exports to Japan. US-China trade totaled S935 million, a smaller increase than anticipated at mid-year because China canceled contracts for US grain worth about S300 million. .Wheat, corn, cotton, soybeans, and oilier agricultural products composed about ?8O% of total US exports of S820 million (see the table). US mnchinen? and equipment exports rose as delivery began on equipment for the ammonia plants purchased in 1973 and the second h::?if of the S I50 million Boeing contract was Approved For Release 2002/02/19 : CIA-RDP86Yb0608R000600040046-3 Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 US-China Tradel US exports 63 690 820 Agricultural products Of which: 61 578 -656- Ale ? Wheat 35 278 2?4 Corn 24 132 96 Soybeans .... 43 140 Cotton .... 101 -186 Vegetable oils 2 19 8 Machinery and equipment 2 69 107 Of which: Aircraft, including engines, parts, and .. ? accessories 63 76 Steel scrap 24 12 Other .... 19. 31 US imports 32 64 115 Food, beverages, and tobacco Bristles and other cnide 4 7 16 animal materials 8 8 10 Textile fibers 4 6 5 Nonferrous metals Chemicals (including 2 8 11 fireworks) 2 ; 8 18 Cotton fabrics 2 7 26 Antiques and works of art 3 6 8 Other ?7 14 21 completed. Growing purchases of cotton textiles helped boost US imports of Chinese goods to S115 million, tip from S64 million in 1973. US-China trade encountered several problems last year. Chinese complaints over the quality of US grain caused delays in wheat shipments and the cancellation of soybean contracts. US controls on scrap steel exports prevented delivery on several contracts. On the import side, shipments of Chinese shrimp were rejected by the Food and Dnig Administration, and the Chinese at the Fall Canton Fair were more vocal about the lack of most-favored-nation status for their exports. Purchases of agricultural producls, machinery, and transport equipment were largely responsible for the growth of China's total imports. China contracted for Approved For Release 2002/02/13 : CIA-RDP86T00608R000600040046-3 Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 almost 10 million ? tons of plain in 1974, but shippinig delays and contr;irl cancellations dropp.d actual drli~rri:s to 7 million tons, down front 7.7 million in'1973. Higher ,rain pt ices, however. pushed the cost tali to over SI billion. Imports of soy l .ea ns? and cotton were up sttt staati:ill}' from 197;, Nlacliincry and equipment imports rose sharply as I: rce-seal: deliveries hcgan on the S2.5 billion worth of whole plants and other equipment ordered in 1973. Peking signed contracts for 5900 million worth of whole plants in 197.1 - down from the record 51.2 billion level in 193. Rapid inflation and tight world credit marl:ets, plus China's need for a breathing spell to ab,orb the large amount of technology already purchased, were the major reasons for the slowdown in purchases. Contracts worth 5550 million for the Wtt-han steel tolling complex composed much of the purchases. with the balance going for additional synthetic fiber, fertilizer, and electric power plants. In contrast to the whole-plant pro~ram, new orders for machinery and transp3rt equipment in 1974 were off sharply from the record level of 1973. China's exports rose by roughly S1 billion in 1974; petroleum accounted for almost half of the increase. Sales of crude oil and petroleum products to Japan. the Philippines, Hong Kong, and Thailand amounted to about 4.5 million tons worth S44Q?million. Rice exports benefited from, high prices, but other traditional Chinest! exports, particularly silk and cotton textiles, faced declining derttand. China's trade this year will be tempered by Peking's attempts to reduce its trade deficit. Export growth will be small. reflecting poor sales of traditional products at the 1974 Canton fairs and recession-weakened demand in the West. An expected doubling of petroleum exports-My do little more than offset the decline in other exports. Imports of machinery and equipment will be substantial as lame-scalc deliveries -continue on 1973 and 1974 contracts. The successful 1974 harvest and declining textile exports will permit cutbacks its. gain and cotton imports. Other, less essential ?~ imports %%ill be curtailed and the pace of new plant contracts may slow further. The S700 million surplus enjoyed by the United States in its trade with China in 1974 will be cut sharply in 1973. US exports to. the I'RC could fall to one-third last year's level. while US irnport: will continue to rise. China's current low interest in US?apriculturai products stern: from an adequate domestic crop last year. I determination to rase a ti,'dit foreign exchange situation, and diss;ctisfoaction with Approved For Release 2002/02/19.: CIA-RDP86T00608R000600040046-3 Approved For Release 2002/02/19: CIA-RDP86T00608R000600040046-3 the (quality of I IS s':ht'at, corn. :1114 co> I~::-n.. I'cl.inl' r:n)crlrcl cniitracts for 'llilln.I 1.0 milli(+n toll.. (11 t'S in rally, 1975, Iln'trhy c?Iii+linalin!! Mk. 1!nitrd Slat's ns :i supl+lik?t .il Ir:i.t rot ill'.' titn+' I+; i 1('. Ac kit collon, cc+nti.icl; c.illk'd frr dkhv'iv hi 1975 or .`+(1ftOO Ir,ilv?. a?clitIi :il+(lt,t S1(1;) i, ilhoi , chink..., )nlcr; .t in us cotton )17G diminish; d, ho vrr; on; crnll-a,1 foot :70111,000 11:ilk': I1.1s .'l'ady I1; ; n C.111C k'd and aclditi++i;.:l CilI C'll,itions nl:1y ucc?ut. ' in conttasl to tacit ptclducls, I'S in(!ti tti:i1 cxpc111% should C(nltinuc Icl Ii.( in 1975. ,1ltlicl;:t?11 new Mary Aut US toaEhin:'ty ttit.'kd (mlv 515 million in I071. S1rlivcric% unc!; t 1973;c. ?? nntal'1c cclt:it+:n iit for the ci;?ht Whir ammon plants will p:a1; in 1971 With cspnrl controls off. I'S sal.?s of sled sct.tll crnild tcbound to the 1973 ic.,'i or hill: r. (jai:1?..te likely for such US mamifactutcd roods as pap; t. aluminum, fettiliict. :ind Other chemicals. T e steady We in US impotR of Chi-,U-ST food: is likely to Cortin;lL -- from Si 1 S million in 1171 to S 121515n l; in 1975, C!iincsc int, t: ct in 111^ I'S 111arl:Ct iG t'rC)tt')tl,: at a Itlnk'::itc plcc. I):Jinatic chanrcc in produc" vi marl;^tit1r antanpcrucnts arc not to bc' expected this year. Approved For Release 2002/02/49 : CIA-RDP86T00608R000600040046-3 Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 11r. 'I hr l'I((' I'Ctn,lrnnt $~illimtion i iffrrn )r:+t: mf(1. IIt 1'ro111r% 1:r11nl+I,c or (?Ilin:t -elir(1 1111 fllr !!SSI: fot 1HO.. 1l-:n! hill (,f It)( ()II it (otl?.um(rl. Ioll.:N?. ('Ilan., i?. thr aotld,!: 13t11 l:lt!?c;t tail pt(r(Int?t't mill 1;;1. rt,: 1! cd :r. .1 1 ita'nli.lfl?; l.ltpc oil r\i+utt: r. 'I I-i'. I+.II?; t hti: flj trvict,c tit^ 0!,%(l()i,nlrt)l of (llama':, (+.'t-nl'.littl inrl,l?.It%. and fhr tr(rut FFtowth of i1% oil Cultists and :u .,`;r~ llt; ;+-o;l+rrtc for fultu- c\iaorlc. larch Su11111~ i'n:ifion Il-c I'I{C 11;(,ducr(1 art C:titll:atc(I .160 trillion 1(+m (S1=(. hl;i;)? c+f 111itn.'tti? cnctl-v in 1914. in it: Iat^ 1','50.. tclic(I on coal for 95',, of if: ptiu;laiti, cnctl'Y. SitC ? ,him tlu I+rrt11at1' Ct1Ct;Y nl;N ha: tul(1Ctf?(+;1C C(+11`?1(!cr.11,l0 A% sltat?.al I+:lrr:~, Il:c talc of coal 11.1; ttcclitnrc1. ahllc loth oil and n.itl-tal i i; have ticcn ill i:nportancC. i'ctccnf of i'rilnaty I ncrr. t'ImI;1ccd 9S 63 2 , 2 I iS 2 17 4i1tcntly rn i v s'I; ;,licc arc ti?lli: coal p:mfilction ha; not kept lip %%ith 3ctnand. AIIiN+:+ - ih:' :a;,ic1 c,c:'li~ (,f i ; i'n!? t,t11 p;oc',uctit~m r'c; I'cl.i;1 ? ih: Option (if cu!^:i;lut,n;: c,tl for coal, tl;.: ; (nc;mtacnf hat cn c+nly lilmt: d :ic; in this tlltcction. .1 I;.a:i i*.ittl~' hey: u:c c,f C"tairaa't h;,;-i tccct> cc of Coal. 'Icy:; ling tt ut, ri1,1:a' J;!1':~r~ to I":lIC,C lhaf iu ;:.1i1:1~ tall s;ti+;,1tC, arc h:t:Cr to cirpal'+d the i-,:Iro:h:;nlc.11 1;-(lu?.trv an(l to tarn nanch?n:cdcd (or:i;;ri cwh:.l1;;, Crude Oil Output. Rc%cncs, and Ftllloritiolt (Trim aclliccccl c:!(,s,lf1tc-cllcl,' i'i cnldc oil I"ir,t(tctinn in the mid' I't(?f3: 3:1.1 in 1974 w.n ih; t 411i(t\\ 11111 Its cl I'loduccr. t-, h,:1d ln(!(+n; .l ? Chid: (-.If ontl?;,t pcw at a tatt? of ',~:; ik?r )-car tfutin; I1110? 7.1 mill teach; (I 65 mullion tons (I. ntilhrn t+itt: Js I?; t tl.,~ 1 in I'17.1 ("c e 1110 Llh1c). '? }90.+4*(J I 'iilri I'ti: r TTIr?: ircG 'mc; S.l i-n t rttL.tti)r fattitri: int Iltrtjr(t hl}rla'rrllrnf Y;~ail:, fn rcfal+ is?i a owl's). :!?:.'7 l c',trt ~.',s! l{ i7fr cGfafr: wolitil jr I'tm(IIrIlitr. j1 ?G:iGtatl+r t., ea'iatal?t ,1.rtc. ',+l fit f;Sat?'i:~ tlr! 1?rt (nafsilaf^r:r rrntrit f+ t fa?r::, ta/a i>atrtiaf.c f t;r r?.~r}rarsr- ! a:;,. r,,!?:irli?r:I his_f~ v?ir1'1' E trf%li::f: fr?t csTlaill: 1s1,.: tt f iiltrt r St qr (Tit frr, t tt`.ac in, and i ft.,' a1::. }rCoGortr Ir a?.r rl + r!1 ! fi,:ti?,L 11-,r Y t,,,.-) ,7 Thr Ittrtdtgr t riri of fttio-J. flit la:cc:t ?. -, fetl r }it,ft!! a ini` '~?: :plt r r', 7~, I?ait ft 'iafl) c;+ ' A rti fri atniplift 1 ,17 t ,N 17 i Gi i f ?:: :.r: ref eht r=x ~. tf5: :tp 1: .f rl tltati{ dtfli>ct in i+,:v:ftz;r}irtn in ihf t':litrrl `tart; ? .f3 l?i'a> and r, -;r ti#ttir~ in trcrnt watt in tc Io tw?tli fl6~ert ;I- ;1W! p ta'lz~r-? #'r:ift.y.l,r.)t rrlff`t(t:(j tfifurftrt::t in itipftti#f in tlir V( (,!Ill fialf fif tat= vrat. ? J`,i!?if #13 ifri-InC '4#tli IL, ttcrnt If nil" - tYr Irt to 4:t f`:at3 f;;tit#rt ff ~tf1 S t tal-i!?i fr:.~l r-{?n i:L ;'it,' i ut tiii:g a=,ri Io tctfri, I f(1U,f nrtc to j"ir:I %cntutr, in t't'N (r:,rc 7 11;114 cil11 f rEf#ia ?{ r:i tn?^,4t f,1: flpt#rl~;rt ;t 1~t i'?~; trl ttlilil!7 !'t3a hecaut.r much rrrtu f;r.r{ (~ccutI 127 t:call r; 1crrt-t?fe t?iatlrfrJ f*;;tlalc the r1:+tt cifirt T'ri?rtctt dutinr fhr I'.rtin+1 wat tart ratfi(lilark itl7r testis tatrrl: 1~c4aut,f of the tluE ;t1- i>cffiIrmanr of if xt#Irc? rtr>Wth in 197:, -tat only, -;Ih an urt;,lrxr to h`%r IOZ in 1974 tir.ft thcirtt. nr% caracih (ffatril in indliett;rt tfh at (rmfnf, ehcmicalt, and whisk acs-uil'h 01('1110 ravr the v-ay for mote tap#fl C I'Intion of rtotlu(Iu'n in (orrinc watt International Pa- mrnts (.ainj :8 The moot ctril,lnr feature in the 1971 intcr'n. trc{nat pa%Mentt rictuir v.-a,, the un.;nhc;pared do oct to nil ptrcet. a rand that rtcatly inictitifird in 1974 Oil accot.Intci$ for almost 11alf of Indonesia's export trvrnuc in ln'p and climbed to more than two-thirds in 1974 (sec Table :) , TIw volume of oil cxpotts row a dramatic to 426 million hariclt in 197.1. Shrrmcnts were siirJitly hither in 1974. but softcninr demand in the fourth quarts r rrcvcntcd a srrnilicanf incrracr over the previous year's r*pofts. Ncvcrthclcss, fret nil rrccfpts nearly quadrupled in Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 Aplyoved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 CO1111D1'N11At lnrt,t:w.t" )ialarnro nt S4 ,r, acnlt Sgmrr,w' Mijlatn 1'` % 1.757 ,1)11 1 (,')f) t )_! A77 j.14t! 4,(.vf) 1 af)1 J?r?r, -4 ,); f) fkI i(t .41 7f K) ,i: - r,-! 1.171 - a1r, a,l ;o I t4 n1J j wii1 J 7/,1 WTI ~jt .141 .1611 0-4 4j7 .740 117 .j70 (,711 1(W) .14 Sr,1 .47A -A(), his )IC r(qt,) 4, F 4QA 7(x) jtr,,,-41111 t?rn, fir,) JSx :(4R Oct (htar! 1(9 f1A ;4c iAt ttn (11111 447 (.:4 7" 11th, 111;?,111,1^2 ! ?74 .1 pia '41 1.144 4f! fit e-t$ pr cc~?-,,t t~:.'t 1111 ?10 rf59 1~7 .11 .1,411 t7d 1107 1.49- 1 i eer--r?.d 1 Ar'- ,Sr r,*ata~r*:rrru~w re~.r.rr S.,-, h,ll:ttn as tile a~ct.+~c price p.t hattci of 1),d t;,rclan ct1)t;c tc 1 `l'i't 5 7. from :r to ncativ S~ 1 ti :9 The pc'tacular pctrt,lcum dc%clorrnchtc (entlctl to mock me sharp pain, in 0thcr cxptart hrT,%. which r11:.c atao%c the S: billion mark in 11) "?1 dcsjtltc t11c Slowdown in file second half of the ycaf (%cc Appc ndix C). Mlorrover. thctr were u s of u,mc hRLadcn,nr of the export hass, and Ifl%c%tmcnt in Lev resource area% txgghtcncd prospcct% for more rapid growth with indu%trial recovery in the dcveloped world. i0. Impart% (c.i.(,) reached S2.7 billion in 1')73 and increased to an estimated 54.3 billion in 1974, rcflectinr buoyant domestic demand and hirli world Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 . Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 CONIRANTIAL Approved For Release 2002/02/19 : CIA-RDP86T00608R000600040046-3 ptit rc. Sharply ricinl: capital I!ood% and imports, particularly for pellolcunl prat#n(linn, anal hii:hrt food and frrtiliirt pticr% wctr lathcIy re sportr.ihlc for this firnd. Alvi irnllir-f: upward ptecattr on intpotl expcndihtte was the acec'Ictalion of drvclopttlrnt ptnjrcf-irl.itrd import; in iht' Iacf (platter of I974, 31. Net ptivatr capital inflow; inctra-,ed in Will years. I)ircct invcslinent in 1973 teat hrd ' ;290 itlillin-; and wac iip to S455 trillion in 1974, despite new tattle Lions on futril:n invcctmcnt (ccc Appendix I)). Much of tins capital is a:cn(.iafrcl with i'crfatnin:r invcctmcntc, where the %ificlnte% relating to dotncstic cgiiify particjpation or dorm; of certain actors to foicil:n invcstmcnt arc likely to be i1 noted. 32. Oif`icial capita) inflows wctr came I above the previous year's level. In 1')71 thr plydi:cd 840 tniliiun in aid to Indonccia; S024 trillion %%-as spent by thr end of I)ccrinhrr. ('nntrary to cancwt expectation;, forciltn aid continued at a relatively high level in 1974, iIcspile impt(n'cmcnts in Indonesia's lmlancc-of?pavincntc and budi:ct pmcitiunc. Actual cxpcncliturc .c of iGGi aid in 1974 Nrrr an cctimatcd SSt;S nlilhon. somewhat Ices than in 1973. However, dicl>sit`cmcntc undrr a lap.inccr rover nrucfit -tu?l;ovctnmcnt Ioan for development of the oil sector htoul:hi an(tthct S ISO tnillimi. for a total of S73$ million. 33. lndnnccia paid s 1 24 million on official external dchtS (principal and infercct) in 1973 and wa-, cchcduled to pay another SI4S trillion in 197.1. The rwernincnt ila% failed to tcspnnd posihcely to curIecttufs by its creditors that deli tcp?ymer.t !. ac:rclctaiccl, cis rrpa}'-nenk wilt most likely conttnuc to follow the uhedule, Total public debt scrvtce7 ac a ;hare of I?tocs commodity export-, was about 7r in 1974, down from 9-r ill.: previous year, 34. Thccc paymrntc p.lttern% torethcr netted foreign cxchar.;:c tc-,cncc of S i .5 l' Il,oti by the end of i)cccmbcr 197.1. an incrca'C of S0.7 billimn over 1973."cS of Mich mai:nitudc. equivalent to about 4 months' imports-are a new phenomenon in Indmncci i and will undoubtedly he a major factor in donors' aid dcci-,to; in 1975. 6. (ntttp,+ttnm