PUTTING COMPUTERS TO WORK IN CHINA: PRIORITIES, PROBLEMS, AND PROSPECTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP04T00794R000100600001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: December 22, 2016
• Document Release Date: June 2, 2011
• Sequence Number: 1
• Publication Date: February 1, 1986
• Content Type: REPORT

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Directorate of Seeret
Intelligence -y
in China: Priorities,
Problems, and Prospects
Putting Computers to Work
et
EA 86=10004
February 1986
Copy 2 2 (~
/
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Directorate of
Intelligence
in China: Priorities,
Problems, and Prospects
Putting Computers to Work
China Division, OEA
Office of East Asian Analysis. Comments and queries
are welcome and may be directed to the Chief,
This paper was prepared by
Secret
EA 86-10004
February 1986
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Putting Computers to Work
in China: Priorities,
Problems, and Prospects
Key Judgments Over the past several years, Beijing has embarked on an ambitious plan to
Information available computerize planning, production, and inventory management in China's
as of 27 January 1986 industrial sector, and to automate logistics and command and control of
was used in this report.
the military. It has done so by sharply increasing imports of computers-
purchases of microcomputers more than doubled last year; encouraging
domestic assembly and production; developing new administrative controls;
and allocating funds for improved software development, maintenance,
repair, and education.
Efficient, effective, and widespread use of computers will be slow in
coming. A shortage of qualified service, software, and training personnel;
inadequate supplies of peripheral equipment; poor data communications
links; and general infrastructural weaknesses keep as many as 80 percent
of China's computers from being used effectively-if at all. Continuing
bureaucratic confusion also slows progress. The organization nominally
responsible for overseeing China's computer program-the Leading Group
for the Invigoration of the Electronics Industry-has not yet proved able to
ensure that imports fill the requirements of a dozen different ministries or
to coordinate the work of researchers and producers in military and civilian
entities. Finally, US and multilateral export controls will continue to limit
the types of computers and software available to China for such applica-
tions as sophisticated design work, computer networking, seismic data
processing, and weather forecasting. These problems will keep the Chinese
from establishing reliable nationwide computer networks until at least the
mid- 1990s.
Nonetheless, over the next five years, we expect China to make progress to-
ward boosting its computer inventory and improving computer use. Com-
puter imports and domestic production will continue to increase, and we
expect microcomputers that are assembled in China from imported kits
gradually to substitute for imports. As China's software and service
personnel increase both in number and in experience, moreover, computer
utilization will also improve. This optimistic view is supported by several
factors: high-level endorsement of and financial backing for computeriza-
tion, recently liberalized US and multilateral export controls for some
types of computers, and the establishment of joint Chinese-Western
production facilities.
The growth of computer use, in turn, will lead to improvements in product
quality, productivity, and energy efficiency, and to lowered production
Secret
EA 86-10004
February 1986
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costs. But here, too, there are limits. Low wage rates, inflexible factory
management practices, and a lack of labor mobility will, in our judgment,
limit the financial benefits to Chinese industry from the introduction of
computers. Moreover, some managers reportedly do not use their comput-
ers for inventory control because to do so would eliminate "backdoor" sales
and supply channels.
Some civilian computer projects have military applications. We believe a
current project to link Western minicomputers and mainframes at China's
universities is tied to the Chinese military's plan for a computerized
command network. A project involving the automation of track scheduling
and reservations for China's railways-which involves secure fiber-optics
technology-may also be backed by the military. But military data
networks necessary for improved command and control will be delayed by
the need to improve data communications links, and export controls on
design software will impede Beijing's advances in military research and
development.
The United States will remain a critical partner in China's program to
promote the use of computers. US firms so far have been the most willing
to transfer computer production technology, and US computer equipment
enjoys a reputation in China for reliability, systems compatibility, and
servicing ease. Nonetheless, stringent restrictions still apply to sales of
networking equipment and intercity data communications lines, and
Washington will face continued pressure from Beijing to permit sales of
this equipment. Beijing might even threaten to delay purchases of US
computer equipment for nationwide networks until it can purchase the
requisite networking technology as well.
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Key Judgments
The Goal: Widespread Use of Computers
Strategy
Increase the Stock of Computers
2
Make Better Use of Computers
3
Who's in Charge?
Outlook: Progress Impeded by Bureaucracy and Trade Controls
7
Priority Areas for Computer Use
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Putting Computers to Work
in China: Priorities,
Problems, and Prospects
The Goal: Widespread Use of Computers
During much of the last decade, China used comput-
ers primarily for projects that required data calcula-
tions on a massive scale-processing seismic data for
the energy sector, conducting a national census, and
forecasting weather, for example. In recent years,
shifts in China's economic modernization strategy and
in military requirements have shaped the selection of
additional priorities for computer use. China's eco-
nomic reform program heavily emphasizes improved
productivity, more efficient management, reliable en-
ergy supplies, and expanded transport capacity-all
areas in which computers can bring significant re-
sults. Computerized communications systems for
command, control, and logistics are also an integral
part of Beijing's plans for military modernization. The
advent of sophisticated, versatile, and inexpensive
microcomputer technology, and US and COCOM
adoption of more liberal export policies have also
contributed to China's redirection of computer re-
sources
Beijing recognizes the importance of modern data-
processing and communications systems to both in-
dustry and defense, and is embarking on an ambitious
program to broaden the use of computers in these
sectors. A number of ministries and central agencies
have undertaken programs to apply computer technol-
ogy to production and planning. Priorities for use of
computers include:
? Computer-aided design (CAD) of large-scale inte-
grated circuits and aerospace vehicles.
In addition, the Chinese have recently begun to
provide information in the open press about the country's computer
production capabilities and limitations, and problems with effective
computer use. Trade data reflect overt acquisitions only, and are
based on US customs statistics and United Nations' member
country reporting.
? Process control and resource management in the
metallurgy, manufacturing, and machine-building
industries.
? Inventory control, supply scheduling, and financial
accounting in factories.
? Planning, logistics, and training for units of the
People's Liberation Army (PLA).
? Processing seismic data for China's petroleum
sector.
? Improving research facilities at key universities.
Other priority projects require computer networks and
data transmission links between cities:
? Scheduling passenger reservations and freight trans-
port on China's rail and air lines.
? Predicting medium- and long-range weather
conditions.
? Processing national census or industrial
information.
? Keeping records of technology purchases made by
national and local trading corporations.
? Automating transaction processing by the banking
system.
? Storing and disseminating technical information
retrieved from data bases in the United States,
Canada, and Italy.
? Enhancing military communications, command, and
control.'
To spread computer use, Beijing initially sought to
increase the number of computers available by in-
creasing both imports and domestic production. As
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Figure 1
China: Imports of Computers
and Related Equipment, 1979-85
A00
Figure 2
China's Stock of Computers,
1982-86a
Imported
Domestic
I I I I I I 1
1979 80 81 82 83 84 85a
a Estimated.
b The growth in domestic computer production in 1985-86 largely
reflects equipment assembled in China from imported kits.
China's inability to absorb the technology became
increasingly apparent last year, however, Beijing
strengthened its efforts to boost the ranks of computer
personnel, and to exert better control over the quality
of computer imports and domestic goods.
Increase the Stock of Computers
Expand Imports. After three of China's powerful
commissions-Planning, Economics, and Science and
Technology-announced a September 1983 decision
to focus on microcomputers instead of larger comput-
ers, imports soared. Although precise figures are not
available, drawing on fragmentary information based
on US trade statistics,
and Chinese press reports, we judge that
The announcement also coincided with a decentraliza-
tion of foreign trade control that resulted in a prolifer-
ation of small, loosely regulated trading companies
eager to profit from the growing demand for comput-
ers. China's imports of microcomputers and larger
systems reached $330 million in 1984-triple the level
of 1983-and may have exceeded $400 million in
1985, according to UN trade data (see figure 1).
Boost Domestic Production. Nationwide, the surge in
imports overshadowed production gains recorded by
the domestic industry. Since 1982, imports have
exceeded domestically produced goods in China's
computer inventory; imports now account for an
estimated two-thirds of China's stock (see figure 2). In
Chinese purchases of micros increased from 20,000 in
1983 to 30,000 in 1984, and roughly 65,000 in 1985.
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individual enterprises, users developed a clear prefer-
ence for imports over domestically produced equip-
ment They con-
sidered imports to be more reliable, more easily linked
Figure 3
US Exports of Computer
Equipment to China, 1984-85
to other computers and systems, and to have a wider Million US $ by quarter
range of software and peripheral equipment available.
The relatively high prices for domestic computers
provided additional justification for users to seek
imports. As a result, in the last few years, a number of
Chinese factories stopped producing indigenous com-
puter models, finding it more lucrative to assemble
computer kits or to sell fully assembled imports,
according to consular re-
ports.
Apparently concerned that foreign domination of
China's computer market might stunt development of
the domestic industry, Beijing in early 1985 imple-
mented measures to curtail imports and encourage
production in China. Beijing dropped prices on do-
mestically produced microcomputers, cut the duty on
computer components imported for assembly, more
than doubled tariffs on microcomputer imports, and
imposed a 40-percent import surtax on micros. China
further curtailed computer imports by centralizing its
import-licensing system over 15 key commodities,
including microcomputers, and by reimposing controls
on foreign exchange expenditures that limited major
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purchases to those for essential projects already in the 25X1
state plan. Finally, in May 1985, the State Council
adopted regulations on technology imports that for-
mally tied purchases of advanced equipment-includ- and poor data communications links, moreover, have
ing computers-to transfers of production know-how. limited effective operation even of better quality
US export figures reflect the combined impact of imports Over the past two years, China has
these measures on computer sales to China in 1985 introduced a variety of measures to improve computer
(see figure 3).
Make Better Use of Computers
The Chinese openly admit that one-half to four-fifths
of the country's computers are being used ineffective-
ly-if used at all. Chinese users
have reported that computers produced
in China are outdated, unreliable, and incompatible
with other Chinese or imported models. Moreover,
imported computers may be obsolete, low-quality, or
counterfeit goods that are frequently incompatible
with other equipment or simply unserviceable. Inade-
quate maintenance, the absence of applications soft-
ware and peripheral equipment, improper training,
utilization.
Setting Standards. Beijing has tried for several years
to limit computer imports to selected models,
eaders renewed their efforts
in the middle of 1985, when-to replace a dormant
standardization committee formed two years earlier-
they gave the Bureau of Computer Industry of the
Ministry of Electronics Industry (MEI) expanded
power over the planning of a coherent computer
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development and purchase policy. Initially, attempts
to standardize were probably designed to take advan-
tage of the abundant software available for certain
computer models: more recently, we believe the Chi-
nese are prompted by increased interest in computer
networking.
Writing Software. Beijing has earmarked at least
$200 million for software development over the next
five years, and hopes to increase its corps of software
programers from 10,000 in 1984 to 100,000 in 1990,
according to press reports. The massive effort is
motivated, in part, by the hope that China can
produce software for export; in part, as an offshoot of
developing software to make computers more useful.
In April 1984, the MEI formed the China Software
Technology Company (CSTC) to draw up a five-year
plan for the country's software industry and to coordi-
nate the plan's implementation. CSTC, in turn,
formed the China Association for Software Industry
several months later to distribute software. In 1985,
independent of CSTC, the State Science and Technol-
ogy Commission announced its plan to set up "world
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class" software centers in Shanghai and Beijing. US
computer scientists are already beginning to train
staff for the centers
Finally, Beijing has solicited foreign firms to cooper-
ate with Chinese programers in developing software
and, despite the absence of legal protection against
pirating, has attracted more than 20 foreign part-
ners-60 percent of them from Japan.'
Developing Chinese Character-Processing Methods.
To make computers accessible to more of its people,
China must develop methods for coding and manipu-
lating Chinese character information. Chinese univer-
sities and institutes are widely reported to be working
on more than 400 methods. Military research centers
are actively working on character coding because it
could speed command and control-which now uses
cumbersome four-digit telegraphic codes to represent
individual characters-without forcing field personnel
to learn English. Western vendors are working to
develop methods to accommodate the large number of
potential computer users who do not know English. In
January 1986, Beijing issued criteria for selecting
character-processing methods.
Enhancing Data Communications Links. The leader-
ship ranks progress in improving China's outmoded
and overworked telecommunications system among
the top priorities for the country's economic develop-
ment program.
Easing Shortages of Peripheral Equipment. Over the
last few years, Chinese factories have signed assembly
agreements with Western firms for printers, termi-
nals, floppy disks, and disk drives. As a result of some
of these arrangements, the availability of peripher-
als-especially for imported computers-is slowly im-
proving. Beijing has not formed any central authority
specifically to oversee the purchase and development
of peripheral equipment, however, and the availability
of peripherals for indigenous computers remains poor.
Providing Maintenance. The MEI formed the China
Computer Technical Service Company (CCTSC) in
1980 to ensure that adequate training, aftersales
service, and transfer of production technology accom-
panied computer imports. CCTSC, with 3,000 em-
ployees, has set up service centers in nearly all of
China's provinces, and has signed at least four cooper-
ative service agreements with foreign computer ven-
dors. In addition, the China National Instruments
Import-Export Corporation (INSTRIMPEX) is in-
creasingly providing maintenance and repair services
to users for whom it has made purchases. INSTRIM-
PEX exercises control over as many as 5,000 addition-
al service personnel, and has signed at least nine
cooperative service agreements with foreign firms.
Improving Computer Training. CCTSC also coordi-
nates an active nationwide program to improve com-
puter literacy. In 1984, it set up 41 training centers,
announced plans for at least 10 additional sites, and
produced a series of educational videotapes for micro-
computer users. Independently, elementary and mid-
dle schools have begun to offer computer courses, and
magazines aimed at beginning computer users have
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' China's 1983 patent law does not cover software, and Beijing's
accession to the Paris Convention for the Protection of Industrial
Property in December 1984 is not enforceable because Beijing does
not recognize the jurisdiction of the International Court of Justice.
hinese users have generally
refrained from unauthorized copying of software programs, how-
proliferated.
The program to spread the use of computers through-
out the nation crosses many institutional boundaries.
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Producers include the Ministries of Electronics, As-
tronautics, and Posts and Telecommunications; uni-
versities under the State Education Commission; and
the Chinese Academy of Sciences. Users encompass
every conceivable sector-military and civilian indus-
tries alike; institutes as well as factories. Each minis-
try has at least one import corporation of its own,
state-sponsored technology import corporations make
purchases for several ministries at a time, and inde-
pendent traders operate as free agents during periods
of decentralized foreign trade control.' Given China's
difficulty matching needs with supplies even within a
single ministry, the problem of coordination across so
many bureaucratic boundaries is immense.
Beijing has tried for three years to coordinate the
development of China's computer sector and related
industries. Its first step, in late 1982, was formation of
the State Council's Leading Group for Computers
and Integrated Circuits. It soon became apparent that
the group's scope was too narrow: it had been unable
to limit the volume or quality of computer imports, to
ensure that purchases were appropriate for users'
needs, or to raise utilization rates. Less than two years
after it was established, Beijing reorganized the
group, adding representatives from China's telecom-
munications sector, a handful of industrial and
defense-related ministries that are major users of
computers, and the ministry that oversees a large
China: Key Computer Policymaking Agencies
Leading Group for the Invigoration of the Electronics
Industry includes representatives from:
? National Defense, Science, Technology and Indus-
try Commission
? State Science and Technology Commission
? State Economic Commission
? State Planning Commission
? State Education Commission
? Ministry of Electronics Industry
? Chinese Academy of Sciences
? People's Bank of China
? Ministry of Posts and Telecommunications
? Ministry of Water Resources and Electric Power
? Ministry of Railways
? Ministry of Machine-Building Industry
? Beijing Municipality
Ministry of Electronics Industry:
? Bureau of Computer Industry
- China Computer Technical Service Company
- China Software Technology Company
- China Association for Software Industry
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share of China's computer imports. To reflect its
broader charter, Beijing also renamed it the Leading
Group for the Invigoration of the Electronics Indus-
try. Despite Beijing's efforts to include all relevant
parties, dozens of agencies that are active users of
computers are not represented on the body and con-
tinue to operate independently. A sizable portion of
the trade in computers also remains outside of the
Leading Group. In fact, in the year and a half since
the restructuring, the new Leading Group has report-
edly convened only once. Moreover, it has no funds of
its own, deriving authority largely from the impor-
tance of its leader, Vice Premier Li Peng (see inset).
Outlook: Progress Impeded by
Bureaucracy and Trade Controls
Over the next five years, we expect China to make
progress toward boosting its computer inventory and
improving computer use. Computer imports and do-
mestic production will continue to grow, and we
expect microcomputers that are assembled in China
from imported kits gradually to substitute for imports.
As China's software and service personnel increase
both in number and in experience, computer utiliza-
tion will also improve, in our judgment. Key factors
contributing to progress in these areas include:
? High-level endorsement of efforts to promote the
use of computers, and strong financial backing for
most initiatives.
? Liberalized US and multilateral export controls,
and streamlined COCOM procedures for expediting
case review.'
? Establishment of cooperative production facilities
and service centers involving Chinese and foreign
partners.
? Emphasis at colleges and universities on turning out
qualified programers.
? Increased attention to training service technicians
abroad as part of purchase agreements.
"The changes in COCOM export policy for China announced in
October 1985 will shorten the waiting period between export license
application and approval for the majority of Chinese cases. Upon
implementation, licenses for low- or intermediate-level technology
will be granted by individual countries, with notification to
In our judgment, however, bureaucratic rivalries and
inefficiencies will delay the formulation and imple-
mentation of a coherent strategy for the development
of China's information industries, keeping China from
taking full advantage of its computers. Export con-
trols and the reluctance of suppliers to transfer pro-
duction technology will impede advances in China's
ability to produce minicomputers and mainframes.
Although the reorganization of the electronics Lead-
ing Group brought in many of the producers and users
the original group had excluded, we believe it will
remain unable to bring order to China's electronics
and information industries. Rivalries and funding
problems will impede attempts to improve China's
data communications capability, probably delaying
the deployment of nationwide computer networks
until the mid-1990s.' The absence of strong central
coordination will also adversely affect the availability
of peripheral equipment and attempts to adopt nation-
al standards for computer equipment and Chinese
character software.
US and COCOM controls on exports to China will
continue to curtail the sale of large computers, sophis-
ticated software, and networking technology for some
applications, including robotics, microcircuit design,
seismic data processing, weather forecasting, weapons
development, and data networks of all types that
operate over long distances. Export controls will prob-
ably also continue to impede or even to bar transfers
of mainframe manufacturing technology, leaving
Beijing dependent on imports of larger computers.'
8 China signed its first agreement with a foreign firm providing for
mainframe assembly in mid-1985. The joint venture is with a US
firm. The export license for this case-the first of its kind-is under
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... For China's Economy
We believe the introduction of computers to economic
planning, industrial production, and transport sched-
uling will-after what may be an extended period of
adjustment-improve product quality, raise produc-
tivity, increase energy efficiency, and cut production
costs. The Chinese press has already noted some
impressive-and often exaggerated-results from the
use of computers: steel and cotton mills earning
hundreds of thousands of dollars extra because of
increased efficiency, heavy industries reducing energy
consumption by 25 percent, and transportation costs
being cut by millions of dollars each year, for exam-
ple. Low wage rates, inflexible factory management
practices, and a lack of labor mobility will, in our
judgment, limit the financial benefits to Chinese
industry from the introduction of computers, however.
Some managers reportedly do not use the computers
they have to control inventory and schedule supplies,
because to do so would eliminate the "backdoor" sales
and supply channels they have carefully cultivated
over the years, closing off routes of opportunity for
enterprising individuals. Furthermore, because Chi-
nese labor is cheap and computers are expensive,
computers do not always reduce unit costs-even if
they do raise output and improve product quality.
Finally, to realize the productivity gains expected
where computers replace human labor, enterprises
must either fire or retrain workers; but, more often,
Chinese factories continue to employ displaced work-
ers by creating unnecessary tasks for them. One
Beijing factory, for example, reportedly trimmed its
work force by more than 8,000 laborers when it
computerized production, then found jobs for the
workers planting trees and recycling refuse.
... For Military Modernization
Enhancing Command and Control. We believe the
establishment of either civilian or military data net-
works-though likely to be delayed for at least a
decade by the need to improve data communications
links-will enhance military communications, com-
mand, and control. Chinese press reports indicate that
the PLA has already deployed a computerized long-
distance communications link-with Chinese charac-
ter capability-to be used for administration and
management functions in peacetime, and command
and control operations in time of war. Civilian net-
works would also contribute to China's communica-
tions, command, and control capability by providing
the PLA with systems that could be taken over in time
of war and by familiarizing military personnel with
computer networking techniques. From a technical
standpoint, data networks to be used for planning and
administration or dissemination of technical literature
do not differ substantially from those suitable for
command and control of military forces. Moreover,
several of the planned networks with an overt civilian
application may be linked to China's efforts to up-
grade its military command and control:
? We believe a project to link Western minicomputers
and mainframes at 14 of China's universities could
be tied to the PLA's plan to link its scattered
computers into a computerized command network.
Overlaps in personnel and similarities in the equip-
ment involved support this judgment. In addition,
Chinese planners have acknowledged that the com-
puters selected for the universities were chosen
because they were used in the US Worldwide
Military Command and Control Network. More-
over, one of the universities houses part of China's
strategic missile force, which is attempting to pro-
cure up to 200 additional computers for a nation-
wide network.9
? We further judge that a project involving the auto-
mation of track scheduling and reservations for
China's rails could be backed by the military. This
project involves computer models that are prized by
military users, as well as fiber-optics technology
that could provide a secure communications capa-
assert control over the railroads' computer network
in a time of need.
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Improving Logistics, Training, and Research and
Development (R&DA Over the next few years, we
expect greater use of computers to enable the PLA to
streamline administration and training tasks-allow-
ing more efficient use of personnel, equipment, and
supplies-and improving combat readiness. Increased
use of computers in military R&D and production will
contribute to China's ability to design and manufac-
ture aerospace vehicles and electronic components for
missile guidance. Poor data communications links will
slow transmittal of logistic information, however, and
export controls on design software will impede ad-
vances in military R&D by forcing Beijing to develop
the more sophisticated programs required for comput-
er-aided design (CAD) indigenously.
... And for the United States
The United States is a critical partner in China's
program to promote the use of computers. Outside of
Hong Kong-whose computer exports are mainly of
US or Japanese origin-the United States is China's
largest single supplier of computer equipment, with
1985 sales estimated at $130 million. US computer
equipment enjoys a good reputation for reliability,
systems compatibility, and servicing ease in China.
The United States plays a key role in China's efforts
to develop nationwide computer networks. All of
China's planned data networks are based on US
mainframes and minicomputers, although some will
use Japanese or European microcomputers or commu-
nications links as well. Despite the general liberaliza-
tion of US and COCOM export controls for China,
stringent restrictions apply to sales of networking
equipment and intercity data telecommunications
lines. The sale of long-distance data transmission lines
has been a contentious issue among COCOM allies,
and the United States faces continued pressure from
COCOM members as well as Beijing to permit sales
of this equipment. Beijing might also threaten to
delay purchases of US computer equipment sought for
nationwide networks until it appears likely to be able
to purchase the requisite networking technology as
well.
As Beijing strengthens the ties between pur-
chases and technology transfer, the greater
willingness among US firms to transfer technology
could further boost their share of China's computer
market.
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Appendix A
Priority Areas for Computer Use
Product Development
To shorten design time, reduce the possibility of error,
and cut the hefty costs usually associated with new
product development, Chinese planners have made
computer-aided design (CAD) a priority for funding
during the coming Seventh Five-Year Plan (1986-90).
Some of China's highest priorities for using CAD are
development of layouts for very-large-scale integrated
circuits and printed circuit boards, and aerodynamic
testing of airplanes and spacecraft before prototype
production. China has acquired some CAD technol-
ogy for design of microelectronics devices from US,
French, and Japanese firms and continues to seek
embargoed software for more sophisticated design
work from these suppliers as well as from Hong Kong.
building sector.
Manufacturing
Vice Premier Li Peng, China's leading spokesman for
the electronics industry, said in 1984 that China's
traditional industries should be the first to receive
computer technology. Li's statements, seconded by
China's senior leadership, underscored the importance
of transforming China's dated industrial infrastruc-
ture to reach the targets of Deng Xiaoping's economic
modernization program. Industrial use of computers
in China has grown dramatically over the past few
years. A tremendous range of applications has been
reported, including process control in the chemical,
metallurgical, and textile industries; resource man-
agement in energy-intensive heavy industries; and
numerical control of tools used in the machine-
Enterprise Management
Medium and small-sized factories are especially look-
ing to microcomputers to manage personnel records,
keep track of inventory, and schedule production and
ordering of supplies. Although the number of factories
using micros for daily management tasks is not
known, the relatively low price of microcomputers and
the simplicity of software design for these applications
have contributed to an upsurge in demand. The
economywide emphasis on managerial efficiency has
spread to military as well as civilian units: Chinese
newspapers report the PLA now uses microcomputers
for many of its planning and logistic duties. F7
moreover, that
the PLA's General Logistics Department plans to link
IBM 4341 mainframes in each military region to a
PLA computer center in Beijing via dedicated ground
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telephone lines, with IBM personal computers to be
placed at permanent lower level PLA facilities. F_
Transportation
To handle the exponential growth in freight and
passenger, traffic on China's rail lines, the Ministry of
Railways plans to set up a nationwide computer
network using up to 300 Digital Equipment Corpora-
tion minicomputers and large amounts of networkin
equipment and software.
The Civil Aviation Administration of China (CAAC)
also will be upgrading its reservations and scheduling
systems with new computers. CAAC signed a con-
tract with a US firm, Sperry, for a computerized
reservations system worth $9 million in May 1985. Its
current system-leased from a French firm-can
handle 1 million passengers a year; CAAC expects to
be booking 13 million passengers each year by 1990.
The Sperry computers, which should be in use by
early 1986, may also store maintenance records, spare
parts inventories, and payroll information for CAAC
and for China's regional airlines.
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Petroleum Exploration
China's burgeoning oil exploration effort has left the
country able to process only 15 percent of the seismic
data it collects. Accordingly, the Ministry of Petro-
leum seeks at least half a dozen new mainframe
computers for use in petroleum exploration. Many of
these are for oilfields only now setting up computer
facilities, but some are to upgrade data-processing
centers in place for several years. Hong Kong is one of
the sites slated to receive powerful mainframes on
behalf of the Ministry." Petroleum industry leaders
have also expressed interest in acquiring a US super-
computer to handle some of the industry's data-
processing tasks.
Weather Forecasting
China's State Meteorological Administration (SMA)
and the Chinese Academy of Sciences' Institute of
Atmospheric Physics are competing for funds to buy a
used Cray-1 supercomputer from the National Center
for Atmospheric Research in Boulder, Colorado, for
atmospheric modeling calculations.
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Economic Planning
China's State Planning Commission has been working
since 1980 to establish a nationwide computer net-
work to process economic and statistical information.
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Trade and Finance
To minimize the duplication of imports now occurring
between cities, China set up a computerized informa-
tion network to keep records on technology purchases
by the country's 14 open cities-which account for
one-third of the country's technology and equipment
imports. The cities will also be linked to data bases in
the United States and Canada containing information
on foreign companies, products, and prices. The Chi-
nese press reported the network in operation as of
August 1985, although the reports did not disclose the
data transmission mode. The sketchiness of the infor-
mation leaves open the possibility that computer
printouts are sent manually from city to city, rather
than via telecommunications links.
The Bank of China is also in the process of computer-
izing its transaction-processing system, and has
bought Hitachi and IBM mainframe computers for its
head office and half a dozen of its branches. For its
medium and small-sized branches, the bank reported-
ly may use more than a hundred Burroughs comput-
ers-probably built in China under a joint-venture
agreement between Burroughs, China's electronics
ministry, and a PRC-backed Hong Kong firm.
Technical Data Libraries
China has been subscribing to computerized technical
data bases maintained in the United States, Canada,
and Italy for several years, but dissemination of the
documents obtained has been by mail-hence, ex-
tremely slow. Recognizing that the absence of an
adequate system for information exchange has been
an obstacle to China's technological and economic
development, China's State Council has given high
priority to the establishment of a computerized infor-
mation system for retrieval and dissemination of
scientific and technical information from foreign and
domestic journals. Construction of the system's head-
quarters at the State Science and Technology Com-
mission's Institute for Scientific and Technical Infor-
mation in Beijing began last year. At least 16 cities
will be included in the network, for which China has
purchased Hitachi mainframes. Chinese press reports
indicate that computers are already in place in eight
of the cities
Strategic Command and Control
The computers to be
linked include the IBM mainframes acquired for the
census, the Honeywell computers supplied to 14 uni-
versities, and VAX-series superminicomputers made
by the Digital Equipment Corporation-many ac-
quired through third-country intermediaries without
US export licenses or COCOM approval. Because of
participation in this effort by representatives of
China's ballistic missile arm-the Second Artillery
Corps-we believe the network is designed to enhance
strategic command, control, and communications.
Chinese officials have probed US Government will-
ingness to assist with the project.
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