CURRENT INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000300170002-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 21
• Document Creation Date: December 15, 2016
• Document Release Date: May 14, 2004
• Sequence Number: 2
• Publication Date: August 20, 1954
• Content Type: REPORT

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COPY NO. 1-5
CONFIDENT1A
?w~sE~~
20
INTELLIGENCE
WEEKLY
DOCl1MENTNO.
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
r S ET
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly has been prepared prima-
rily for the internal use of the Central Intelligence Agency.
It does not represent a complete coverage of all current
situations. Comments and conclusions represent the im-
mediate appraisal of the Office of Current Intelligence.
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SUMMARY OF CONTENTS
NT1
THE SOVIET WORLD . . . . . . . . . . . . . . . . . . . Page 4
PROSPECTS DIM FOR DEVELOPING STRONG GOVERNMENT IN
FREE VIETNAM . . . . . . . . . . . . . . . . . . . . Page 6
Prospects for developing a strong non-Communist
government in south Vietnam are not favorable. The
current French policies will enhance the Viet Minh's
strength in the south, but the French apparently hope
to maintain a special status even if the whole country
should come under Communist control.
THE FRENCH COMMUNIST PARTY AND MENDES-FRANCE . . . . . Page 8
The French Communists, who at their June national
congress publicly admitted some weakening of party
strength, supported Mendes-France for the first two
months of his premiership in the evident belief that
he offered the best chance of reorienting French
foreign policy. Since 16 August, however, his position
on EDC has provoked direct Communist attack.
DISRUPTION TO SHIPPING IN THE CHINA TRADE MAJOR
PROBLEM TO PEIPING . . . . . . . . . . . . . . . . . . Page 10
The disruption to shipping in the China trade
caused by the Nationalist blockade has been financially
costly to the Orbit and may force Peiping to take
positive action.
END OF OVERT SOVIET CONTROLS IN EAST GERMANY MAY
BE NEAR . . . . . . . . . . . . . . . . . . . . . . . . Page 12
The abolition on 6 August of all Soviet occupation
legislation on political, economic and cultural matters
in East Germany is the most dramatic step by the USSR
to enhance the prestige and ostensible freedom of the
East German government since the granting of sover-
eignty on 26 March.
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SATELLITE REACTION TO WESTERN FLOOD RELIEF OFFERS . . . Page 14
The Eastern European Satellites appear to be
accepting Western flood relief offers primarily for
political reasons, with economic considerations of
secondary importance.
COMMUNIST CHINA'S LEADERS UNDER THE NEW CONSTITUTION. . Page 18
Under Communist China's new draft constitution,
it is probable that Mao Tse-tung and Chu Teh will
receive the posts of Chairman and Vice Chairman of
the Republic while Liu Shao-chi will head the power-
ful Standing Committee of the People's Congress and
Chou En-lai the cabinet-like State Council.
COMMUNIST CHINA'S GROSS NATIONAL PRODUCT MAY BE
$33 BILLION . . . . . . . . . . . . . . . . . . . . . . Page 21
Peiping has recently released data which form
the basis for a new estimate of $33 billion for China's
gross national product (GNP) in 1952.
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THE SOVIET WORLD
The Soviet Orbit is continuing its attempts to lure the
Western European nations away from their alliance with the
United States.
Several Eastern European Satellites have invited British
Labor Party, trade union, or business delegations to make
visits, and the British Parliament has accepted an invitation
for a delegation to visit Moscow in the fall. In Moscow and
Peiping, the Communists have received the current British Labor
Party delegations in courtly fashion, attempting to prove that
the red carpet has replaced the iron curtain.
Peiping used the occasion to develop the propaganda themes
of China's great-power status and its interest in peaceful co-
existence with all countries. Peiping emphasized the prospects
for increased Sino-British trade, which it claims is now limited
only by the American-sponsored embargo and the American-directed
seizure of British ships by the "Chiang Kai-shek pirates."
Moscow's trade program continues to support its strategy
of courting Western European countries. The USSR is still ex-
porting precious metals on a large scale in order to finance
its expanding imports from the West. These exports, together
with increased deliveries of such commodities as petroleum
products, manganese ore, and chrome ore, more than offset the
sharp curtailment in traditional Soviet grain exports.
Soviet gold sales, which were accelerated to a level
exceeding $100,000,000 in the last quarter of 1953, have con-
tinued high in 1954. The value of shipments to the West in
the first four months of this year'is estimated at from
$60,000,000 to $100,000,000. In addition, negotiations have
been reported for the sale of a further $150,000,000 worth of
gold. As in the past, the major sales are being made in the
London market, with lesser quantities being sold in France.
Recently, the USSR also delivered $5,000,000 worth of gold to
Finland as a partial payment on its trade deficit with that
country.
As for the Soviet economic program aimed at the under-
developed countries, a Soviet invitation issued at last Feb-
ruary's meeting of the UN Economic Commission for Asia and the
Far East for delegates from Asian countries to visit the USSR
to observe industrial and economic developments was accepted
by India, Pakistan, Burma, Afghanistan, Indonesia, and Japan.
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The Soviet Union recently invited all Latin American members
of the UN Economic Commission for Latin America to make a
one-month visit to the Soviet Union in September. It has also
made several approaches to Asian countries offering, technical
assistance on a bilateral basis,
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PROSPECTS DIM FOR DEVELOPING STRONG
GOVERNMENT IN FREE VIETNAM
Prospects for developing a strong non-Communist government
in south Vietnam are not favorable. In addition to Communist
subversive activity, the present Vietnamese government must
contend with unfriendly French authorities who regard its out-
spoken nationalism as inimical to their interests.
Premier Ngo Dinh Diem's government, like its predecessors,
is weak and inexperienced and Bao Dai's public announcement that
he intends to return soon to Vietnam and to lend Diem his "full
support" is at best a dubious asset for non-Communist Vietnam.
Diem's government would almost certainly lose to the Viet Minh
in any nationwide election in the near future. Diem is rigid
in his thinking and ill-informed on many matters of practical
administration. Presumably on moral grounds, he has not yet
taken into his government representatives of the Cao Dai and
other war lord sects in southern Vietnam.
Since Geneva, the Viet Minh has sought to undercut Vietnam-
ese authority in the south by circulating "election registers"
which virtually force the inhabitants to declare themselves
publicly for Ho Chi Minh. The Viet Minh has also organized
demonstrations which have proved politically embarrassing to
the Vietnamese authorities. A major form of Viet Minh political
action has been to discourage northern Vietnamese from seeking
refuge in the south. The Viet Minh seems to have a genuine
fear that such an exodus would cast some reflection on its
popularity.
Despite the weakness of Diem's government, American offi-
cials in Vietnam believe it has a greater potential for winning
wide popular support than any available successor. Its leader-
ship is irreproachably nationalist and unprecedentedly honest.
Its anti-Communism is genuine, not opportunistic, and Premier
Diem enjoys wide personal respect for his integrity.
Whether this government can cope with the enormous prob-
lems thrust on it by the Geneva settlement, however, remains
uncertain. Its task has been considerably complicated by the
strenuous efforts of the French to discredit Diem with a view
to installing a more pliable government built around a group
of Cochinchinese opportunists. The heavy emphasis French
officials, both in Paris and Saigon, have placed during the
past few weeks on the present government's ineptitude suggests
they want to convince American officials of Diem's incapacity
before attempting any overt move against him.
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More recently, French opposition to Diem appears to have
taken a subtler form, perhaps as a result of Bao Dai's intention
to return to Vietnam. The legality of any change in the Vietnam
government is at least nominally subject to Bao Dai's approval,
and the current French policy is to prevent his return to
Vietnam, where he may be less subject to French control.
The French have taken steps to warn Diem that his most
dangerous enemy is the Bao Dai-controlled police force, and to
persuade him to "broaden" his government. The French aim
appears to be to embroil Diem with Bao Dai while bringing into
cabinet positions, and perhaps the premiership, representatives
of the Cochinchina separatist faction.
The French clearly fear that Diem's uncompromising nation-
alism may lead him to take measures harmful to French economic
and bureaucratic interests. Any authentic nationalist govern-
ment is certain sooner or later to levy heavy if not confisca-
tory taxes on French businesses and greatly to diminish the role
of the French Indochina bureaucracy.
The French may also fear that Diem's belligerent attitude
toward the Viet Minh and his avowed irredentism with respect to
northern Vietnam might at some time embroil their expeditionary
corps in further hostilities with the Viet Minh.
Finally, in the absence of a clear-cut policy to the con-
trary, there is a strong inclination on the part of many French
officials and private citizens to pursue a policy of business as
usual with the Viet Minh--a policy which could hardly be recon-
ciled with a strong nationalist government in the south.
The French policy of resisting nationalism and encouraging
the seizure of power by an unpopular, Francophile clique in
Cochinchina will greatly enhance the power of the Viet Minh to
develop political strength in the south. The French apparently
hope to maintain some sort of special status in.Vietnam over the
long run, notwithstanding a Viet Minh takeover of the entire
country. This French status might take the form of permission
to continue to operate French cultural, scientific, and economic
establishments and to maintain at least nominally Vietnam's
association with the French Union.
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THE FRENCH COMMUNIST PARTY AND MENDES-FRANCE
The French Communists, who at their national congress
in June publicly admitted some weakening of party strength,
consistently supported Mendes-France for the first two months
of his premiership in the evident belief that he offered the
best chance of reorienting French foreign policy. The "hard
line" that had led to the anti-Ridgway riots in 1952 was re-
adopted at the congress, however, and will probably be empha-
sized as the premier's public tactic favoring German rearma-
ment forces the party to recognize the ineffectiveness of its
conciliatory tactics for blocking EDCS
At the June congress, the first in four years, acting
party chief Duclos openly admitted a drop in membership and
expressed particular alarm over the decline in members from
the working class. Membership is now estimated at 400,000,
or only about half that claimed in 1950; but the party con-
tinues to attract about a quarter of the French electorate.
By again emphasizing the "hard line" of violent polit-
ical demonstrations, the congress tacitly admitted that
appeals for unity of action with other parties had not
succeeded in blocking EDCO The surprise investiture of
Mendes-France ten days after the congress ended, however,
apparently encouraged new efforts at parliamentary co-opera-
tione Following Mendes-France's abortive investiture bid in
June 1953, Communist spokesmen had indicated that they would
have backed him had he proposed an immediate end to the Indo-
china war, and in October 1953 acting party chief Jacques
Duclos pledged support for any government opposing the EDC
treaty.
The Communists' general line on Mendes-France has been
that he represents a complete break with previous French
"subordination" to American foreign policy. Although he has
rejected their support and strongly denounced the party, their
press eschewed direct criticism of the premier until mid-
August even on his decision to seek authority to send con-
scripts to Indochina if the Geneva negotiations had failed.
Moreover, despite the national congress dictum, the
party has continued to avoid mass action and other demonstra-
tions which might provoke government interference. It quietly
accepted the government's refusal to renew the passport of
Benoit Frachon, secretary general of the Communist-dominated
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General Labor Confederation, and it raised only mild objec-
tions to the ban on the traditional party-sponsored Bastille
Day parade.
Although the Communist bloc in the National Assembly
abstained in the 10 August vote granting the premier special
powers to carry out his economic program, Communist propa-
ganda and action since the Geneva conference point up the
apparent desire to back Mendes-France at least until the
French government takes positive steps to permit German re-
armament.
The Communists have soft-pedaled demands for economic
reform, playing down nationalization, and stressing only the
need for an improved standard of living. Parliamentary leader
Duclos explained their abstention from the 10 August vote on
the ground that it represented an expression of confidence in
the whole policy of the government, which might include steps
toward EDC ratification. On the same day, the Communists did
vote confidence in the premier's Tunisian reform program,
presumably interpreting this as a further step toward a re-
orientation of French foreign policy. However, Mendes-France's
public statement on 14 August that France must accept German
rearmament provoked a direct attack on him, with the charge
that he is pushing EDC through in an essentially unchanged
form.
Even if the assembly rejects EDC, the Communists will
now probably continue their attacks on Mendes,-France,
particularly since they evidently have no intention of aid-
ing him to put through a program leading to a rehabilitation
of the French economy.
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DISRUPTION TO SHIPPING IN THE CHINA TRADE
MAJOR PROBLEM TO PEIPING
The disruption to shipping in the China trade caused by the
Nationalist blockade has been financially costly to the Orbit
and may force Peiping to take positive action. Since the
seizure of the Russian tanker Tuapse on 23 June, all ships with
industrial cargo from Eastern Europe have offloaded in South
China for shipment north by rail, due to fear of the Chinese
Nationalist navy around Formosa.
The recent floods have washed out portions of both north-
south rail lines with the result that the part of this route
inside China is now closed. In effect, the Nationalists have
deprived North China of industrial goods from Eastern Europe,
which are usually seaborne. The extra shipping costs which
accrued to China, the USSR and Poland during the past two months
are probably equivalent to over $2,000,000.
Besides these major and growing economic considerations,
Peiping and the USSR have lost face as a result of the detention
of the Tuapse and the aircraft incidents near Hainan Island
which stemmed from Communist efforts to provide air-sea escorts
in the South China Sea. Moscow apparently has withdrawn its
ships from the Europe-China run, at least temporarily. No
Russian ship has begun to load in Europe for China since the
Tuapse seizure, whereas during the first seven months of 1954,
Soviet ships carried 30 percent of Chinese seaborne imports
from Eastern Europe.
These factors may soon .compel the Communists to attempt to
provide escort. around Formosa,.or to route shipping far enough
east of Formosa to be safe, or else to start.carrying a`large
part of Sino-Satellite trade on the trans-Siberian railroad, a
costly alternative.
The continued.failure to route ships bound for North China
east of the Philippines and outside the estimated 500-mile range
of the Nationalist navy may reflect uncertainty as to the real
strength of the Nationalists. It may, however, have more
ominous implications--namely, that Peiping and Moscow are
unwilling to have commercial shipping in an area where military
operations may be contemplated.
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Chou En-lai,in his report on foreign affairs made at the
33rd session of the Central People's Government Council held on
11 August, admitted the existence of a blockade of the East China
coast when he stated that the United States had given support
"to the blockade of our coast by the traitorous Chiang Kai-shek
group." Prior to this time the disruption of shipping was
referred to merely as piracy and harassment.
Since 23 June, delays and rerouting of Soviet.vessels alone
are estimated to have cost the USSR $500,000. Polish ships are
also subject to these delays. In addition to the extra costs
of shipping goods overland, export cargoes have not always been
available for ships in South China, forcing them to return to
Europe empty. Total shipping costs to the bloc have clearly
amounted to millions of dollars.
Whampoa, South China's only port, which has dock facilities
for no more than two ocean-going vessels at one time, has been
jammed for weeks. Two Russian tankers which were in the South
China Sea in June were subsequently diverted to Whampoa, and
one is still there. Another tanker, the Polish Wspolpraca,
recently arrived at Whampoa. Due to limited fuel storage
capacity there, it is doubtful that tankers can be handled at
a faster rate than one every three or four weeks.
In addition to these three tankers, ten cargo ships with
59,000 tons of dry cargo have arrived at Whampoa since 10 July,
and four more Soviet bloc ships are now in Far East waters
heading for the port.
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END OF OVERT SOVIET CONTROLS IN EAST GERMANY MAY BE NEAR
The abolition on 6 August of all Soviet occupation legis-
lation on political, economic and cultural matters in East .
Germany is the most dramatic step by the USSR to enhance'the
prestige and ostensible freedom of the East German government
since the granting of sovereignty on 26 March. The principal
Soviet motives are to promote East Germany as a partner in
international negotiations, to stimulate French-West German
differences, and thus to delay EDC.
Major features of the grant of sovereignty to the German
Democratic Republic are the actual reduction of the authority
of the Soviet high commission provided in the 26 March protocol
and the withdrawal of its branch offices in the districts of
East Germany and in Berlin announced on 19 June. On 7 August
the high commission vacated its quarters in the Berlin suburb
of Karlshorst and moved to the Soviet embassy, apparently in
order to give a diplomatic facade to its future activities.
The East German regime has been permitted to take the
initiative in a trade offensive in the West and is attempting
to establish official trade delegations in Western countries
as a first step toward recognition. It has also been given
authority over the movements in East Germany of members of the
Western military missions accredited to the Allied Control
Authority in Berlin. This does not offset the United States,
Britain, and France. In addition, the control of the East
German borders, including customs, has been transferred from
Soviet authorities to the East German government.
These measures have not reduced the real controls by
which the USSR ensures the obedience of a puppet regime. The
Socialist Unity Party (SED) has succeeded to much of the overt
authority formerly exercised by the Soviet occupation adminis-
tration. Additional control measures are provided by sub-
stantial Soviet secret police elements and the 400,000-man
occupation army, whose 22 divisions are more than enough to
quell a popular uprising. The Soviet high commissioner still
has sweeping powers under four-power legislation which
authorizes him to assume supreme control of the country at
any time. Some economic activities are subject to the broad
control of the Moscow-dominated Council of Mutual Economic
Assistance, Moreover, the Soviet Union will continue to
exercise close direction over East German exports, particularly
those that go to the USSR on preferential terms.
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In strengthening the German Democratic Republic's claim
to sovereignty, the USSR is attempting to promote the regime
as a worthy participant in all-German and international con-
ferences and in the Molotov security pact. The Soviet Union
appears to be relying increasingly on its campaign for East-
West German unity talks as a means of postponing four-power
debate on a peace treaty and free elections, questions on
which the Kremlin suffers from an embarrassing lack of flex-
ibility.
A principal feature of the program to bring East and West
Germans together is the easing of restrictions on travel and
communications between the two parts of Germany. In addition,
the East German government has urged Germans from East and
West to meet for discussions of many political, economic and
cultural subjects. A singular success was realized when the
regime permitted the Evangelical Church congress to be held
in Leipzig in July in an atmosphere of freedom not usually
associated with Communist countries.
Another purpose of making ostensible grants of sovereignty
at this time is to engender increasing friction between France
and West Germany over the limitations on Bonn's sovereignty
and any further delays or changes proposed by France in EDC.
Without surrendering any of its physical control, the
Soviet Union will probably continue to make seemingly generous
gestures by giving ostensibly greater freedom and authority
to the East German regime. Such steps might include the aboli-
tion of the Soviet high commission, already reduced in scope,
and the establishment of an East German national airline or
merchant marine.
In spite of Soviet steps to make the East German regime
appear to be a sovereign government, there will be little in-
clination in the West to grant recognition. Some countries,
however, may want to deal with the regime on an official level
in order to resolve problems of trade and transportation. In
West Germany there has been much skepticism about these Soviet
moves, and there is at the moment little enthusiasm for
negotiations with the East German regime.
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SATELLITE REACTION TO WESTE NrFLOOD RELIEF OFFERS
The Eastern European Satellites appear to be accepting
Western flood relief offers primarily for political reasons,
with economic considerations of secondary importance (see map,
p.15), In their propaganda, East Germany and Hungary are uti-
lizing their acceptance as evidence of their "sincere" desire
to reduce international tensions. Furthermore, the Communists
probably feel they can portray acceptance as a manifestation of
their interest in the welfare of the people.
In the past, the Satellites have consistently refused vari-
ous offers of Western aid, and the initial reaction to the 31
July approach was unfavorable. Satellite reversal of this po-
sition was probably prompted by Moscow, which considered a favor-
able response more in line with current Orbit tactics. East
Germany, where destruction of crops and damage to industrial
property was severe, had characterized the "sinister" American
offer as a cover for rehabilitating the "badly torn network of
agents," On 5 August, however, it reversed its attitude and
accepted "President Eisenhower's generous offer," portraying
its action as an expression of its "policy of furthering ...
international understanding,,"
Hungary, with damage to grain production estimated at less
than 2 percent, had initially refused a Dutch offer of 50,000
guilders ($14,000), and had indicated it would not accept
American assistance. On 7 August, it accepted the Dutch offer
and on 10 August acqu.4esced to American aid. In both cases, it
specified that it would rather receive currency than goods.
After almost three weeks of silence, Czechoslovakia an-
nounced on 16 August its willingness to accept the proffered
aid. Seventy percent of the crops in Czechoslovakia's flooded
regions were saved, but damage to industrial establishments is
estimated at $14,000,000. Rumania, which suffered little flood
damage, declined the American offer politely. Aid was not of-
fered to Albania, Bulgaria, and Poland.
In addition to the Western aid, East Germany, Czecho-
slovakia, and Hungary have received flood relief donations from
the USSR amounting, at the official rate of exchange, to ap-
proximately $90,000, $27,000, and $25,000 respectively, Hungary
has also received some $12,500 from Rumania, $9,000 from Bulgaria,
and an unknown amount from Poland. All these grants have been
well publicized in the Orbit press.
The flood damage was probably not sufficient to cause seri-
ous setbacks to the Orbit's economic program. In most cases
there was enough warning to permit the governments to mobilize
military and paramilitary forces and vehicles for harvesting crops
and building dikes and levees in threatened areas.
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EAST EUROPE MAJOR
FLOOD AREAS
D MAJOR FLOODING
X 'BRIDGE (RR) WASHOUT
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COMMUNIST CHINA'S LEADERS UNDER THE NEW CONSTITUTION
Under Communist China's new draft constitution, it is
probable that Mao Tse-tung and Chu Teh will receive the posts
of Chairman and Vice Chairman of the Republic while Liu Shao-
chi will head the powerful Standing Committee.of the People's
Congress and Chou En-lai the cabinet-like State Council.
The draft constitution, to be approved by the All-China
People's Congress in September, appears to take into account
the problems connected with the transfer of authority after the
death of Mao Tse-tung. The semiretirement of Mao from active
control of the government to a position of prestige with limited
constitutional authority would permit the development of a
successor in the position of real governmental power.
Power in Communist China, as in other Communist states,
will continue to depend primarily on standing-in the party
rather than position-in the government. The forthcoming assign-
ment of leaders to certain government jobs, under the party-
designed constitution, should serve as an indicator of party
standing.
The draft constitution follows its Soviet model closely in
many respects, but differs from it in creating the offices of
Chairman and Vice Chairman of the Republic, for which elections
will be held by the All-China People's Congress. Terms for the
offices will run for four years (see chart, p. 20). The Vice
Chairman assists the Chairman, assumes the Chairman's duties
should he become incapacitated "for reasons of health," and
succeeds to that office if it "falls vacant."
Judging from current propaganda in China, the post of
Chairman of the Republic is apparently intended for Mao Tse-tung,
whose ill health may compel him to reduce his role in the govern-
ment. It will be a position of great prestige but will derive
its real authority from the personal leadership and party stand-
ing of its holder. The major constitutional restriction on the
powers of the Chairman of the Republic is the provision that his
principal functions are to be carried out "in accordance with
the decisions of the People's Congress or its Standing
Committee."
The Standing Committee will probably be in effective control
of the congress' functions as "highest organ of state power,"
since the congress, consisting of about 1,200 delegates, is
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SECRET
likely to follow the Soviet example and do little more than
approve measures submitted to its annual meetings. The present
counterpart of the Standing Committee, the Central People's
Government Council, is under Mao's chairmanship. Chairmanship
of the Standing Committee of the People's Congress will probably
therefore become the dominant position in the government, and
its holder will probably be a man second only to Mao in
importance.
The most likely candidate for Chairman of the Standing
Committee seems to be Liu Shao-chi. Liu, currently rated
second in the Chinese Communist hierarchy, would thus be in a
position to inherit Mao's power. Another possibility is the
present premier and foreign minister--Chou En-lai.
The best choice for Vice Chairman of the Republic would
appear to be a popular party veteran. Since the Chairman of
the Republic is commander in chief of the armed forces and
chairman of the National Defense Council, he should also have a
sound military background. Chu Teh, who is 68 years old and
commander in chief of the armed forces, may be selected for this
position in spite of his age. Choice of Chu as Vice Chairman
would strengthen the supposition that the posts of Chairman and
Vice Chairman of the Republic will be largely honorary.
Another locus of power under the new constitution will be
the State Council, a cabinet-like body with functions similar
to the present Government Administration Council. The State
Council will include the premier, vice premier, ministers, and
commission chairmen who are to be formally appointed by the
Chairman of the Republic, subject to the decision of the People's
Congress or its Standing Committee. The Chairman of the Republic,
however, nominates only the premier, who in turn, nominates the
other State Council members.
The State Council is under the supervision of the Standing
Committee,but,through its control of day-to-day government
operations, will occupy a strategic place in the administrative
hierarchy. If Chou En-lai continues as premier, his increased
stature in the party as a result of his recent diplomatic
successes would lend authority to that office.
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PROPOSED CHINESE COMMUNIST GOVERNMENT STRUCTURE
ALL-CHINA PEOPLE'S CONGRESS
PEOPLE'S REPUBLIC
OF CHINA
*Chairman
*Vice Chairman
SUPREME PEOPLE'S COURT
* President
? Vice Presidents
*Chairman
* Vice Chairmen
* Secretary General
* Members
? Premier
o Vice Premiers
o Ministers
o Commission Chairmen
o Secretary General
( To be determined by law )
PROCURATOR GENERAL'S
OFFICE
* Procurator General
? Deputy Procurator General
* Elected by People's Congress
? Decided on by People's Congress on chairman's nomination
^ Decided on by People's Congress on premier's nomination
? Decided on by Standing Committee
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COME ik Lis
COMMUNIST CHINA'S GROSS NATIONAL PRODUCT MAY BE $33 BILLION*
Peiping has recently released data which form the basis
for a new estimate of $33 billion for China's gross national
product (GNP) in 1952. This finding exceeds a recent tentative
American estimate of $27 billion, Until recent years it was
widely accepted that China's GNP was less than $15 billion.
For the first time an absolute rather than a percentage
figure for the output of a major segment of the economy has
appeared in the Chinese Communist press. This key figure in
the new analysis was an estimate of the output of the handi-
craft industries in 1952 and was reported in the Tientsin Ta
Kung Pao on 7 May 1954 as 100 trillion yuan, or $5 billion at
the 1952 exchange rate. The article just received further
stated that this figure was 13 percent of the total industrial
and agricultural output, and 31 percent of the industrial out-
put alone.
With these data it is possible to derive an absolute figure-
of $38 billion for the gross agricultural and industrial output,
From this total an estimate can be made of the available consum-
ers' goods by subtracting the proportion of output used as in-
dustrial raw materials, investment goods, and export. As private
investment in China is negligible, a GNP estimate can then be
derived by adding estimated consumers' services and state ex-
penditures from the budget for investment, military, and ad-
ministration purposes. The resulting GNP estimate for 1952 is
$33 billion.
While this new tentative estimate is 22 percent higher than
the one previously accepted, per capita GNP has risen only
slightly because the recently accepted estimate of China's
population increased the number of Chinese by 16 percent.
China's estimated gross national product of $33 billion is
about one fourth the Soviet and one eleventh the American GNP.
China's per capita GNP of roughly $57 is about equal to that of
India but only about one quarter that of Japan. It is estimated
that China by 1957 will have attained a GNP that is about 20
percent over the 1952 figure. Agricultural output can at most
increase ten percent in the period, but industrial output may
double.
*This article is based on a study by the office of Research
and Reports.
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