Today, we present a declassified Central Intelligence Agency memorandum

Declassified. Today, we present a declassified Central Intelligence Agency memorandum and attached Economic Intelligence Report, dated June nineteen-sixty-three, assessing the prospects for continued economic recovery in Communist China. This document is notable for its frank evaluation of China's aspirations as a major world power. This record is available at documents2.theblackvault.com. This document was released under the Automatic Declassification Program, originating from a request that led to its publication on archive.org. It falls under the provisions of Executive Order one-two-nine-five-eight. Central Intelligence Agency. Memorandum for Mr. Walt W. Rostow, Counselor and Chairman of Policy Planning Council, Department of State. Subject: Prospects for Continued Moderate Economic Recovery in Communist China. You may find this recent study of Communist Chinese economic recovery prospects worth some attention. Our analysts conclude that, from the purely economic point of view, China's prospects for achieving status as a major world power in this decade have vanished. They believe that even a moderate recovery over the next five years will depend on realistic rather than ideological management of the domestic economy. Signed, Deputy Director, Intelligence. The attached Economic Intelligence Report, titled "Prospects for Continued Moderate Economic Recovery in Communist China," was prepared by the Central Intelligence Agency's Office of Research and Reports. A warning on page five states: "This material contains information affecting the national defense of the United States within the meaning of the espionage laws, Title eighteen, U.S.C., sections seven-ninety-three and seven-ninety-four, the transmission or revelation of which in any manner to an unauthorized person is prohibited by law." The report’s Summary and Conclusions state: "General economic activity in Communist China improved slightly during nineteen-sixty-two, compared with nineteen-sixty-one, and the most serious economic difficulties were eased. China achieved a substantial increase in the production of vegetables, sweet potatoes, poultry, and fruit and a slight increase in the production of grain. In industry, production of some priority goods such as agricultural chemicals increased, and improvements were made in the operation of industrial plants. The moderate economic policies that were adopted in the wake of the disastrously overambitious 'leap forward' of nineteen-fifty-nine to nineteen-sixty were continued throughout nineteen-sixty-two. The outlook for the immediate future, nineteen-sixty-three to nineteen-sixty-four, is for a continuing moderate recovery of industrial output based largely on the fuller use of existing capacity. Because it depends so heavily on weather and on the morale of the peasants, agricultural production is more difficult to anticipate. Assuming normal weather conditions and a continuation of the present limited concessions to private activity in rural areas, agricultural output should continue to grow slowly. Food supplies, however, will remain stringent. Faced with overriding problems of feeding a huge and growing population, modernizing agriculture, and raising the level of industrial technology without Soviet support, China's prospects for achieving status as a major world power in this decade have vanished. Prospects for even moderate recovery in the next five years depend heavily on whether or not the leadership will constrain its strong ideological convictions and continue a realistic course in managing the domestic economy. The estimates and conclusions in this report represent the best judgment of the authors as of thirteen May nineteen-sixty-three." Under the section "Background," the report states: "The fundamental fact faced by economic policymakers in Communist China is the existence of a huge and growing population in combination with a relatively small amount of arable land, a low level of technology, and a small amount of capital plant. Immediately after seizing power in October nineteen-forty-nine, the Communist leaders put into operation a program for 'forced-draft' industrialization of the economy. Key features of the program for the rapid buildup of industrial capacity and output were: one, the allocation of an increasing share of national output to investment, and two, the importation from the U.S.S.R. and the European Satellites of complete equipment and supporting technical services for modern industrial plants. For this program to succeed, food production had to be continuously expanded at the same time that important resources were being used to build up industrial and military strength. Largely because the Communist regime brought peace and order to war-torn China, food production through nineteen-fifty-seven did in fact keep up with the growth of population. The regime, however, by spreading food supplies evenly over the population and by reducing deaths from flood and disease, brought about a rapid increase in the rate of growth of population, and the margin between food production and the minimum needs of the population remained perilously thin. In nineteen-fifty-eight, the regime tried to step up the tempo of its industrialization program by launching the 'Leap Forward.' The central premise underlying the 'Leap Forward' philosophy was that China's huge and rapidly growing rural population should be treated as a major economic asset. During the period of the First Five Year Plan, nineteen-fifty-three to nineteen-fifty-seven, the Soviet model of industrialization had been followed closely, and a Soviet-type planning and statistical system had begun to take shape. In contrast, the 'Leap Forward' was a Chinese-style economic program. China was to 'walk on two legs'; at the same time that the industrialization program was to be speeded up, the peasants were to be mobilized into huge new super-collectives, or 'communes,' and the economy was to be carried forward by sheer weight of numbers. The failure of the 'Leap Forward' policies is now abundantly clear. It is apparent that the leadership permitted its agricultural policies to become diverted from reality. On the basis of directives from the center, traditional methods of cultivation were replaced by panaceas such as deep plowing and close planting. Overnight, untrained cadres were placed in charge of construction of a large number of irrigation and flood control projects; many of these projects proved useless or even subtracted from production. The indiscriminate use of rural labor in such dubious projects as the small iron furnaces even led to labor shortages at harvest time. This manmade damage to agricultural production was compounded by poor weather in nineteen-fifty-nine to nineteen-sixty-one. At first, the results for industry under the 'Leap Forward' seemed spectacular, but these short-run successes were achieved at the expense of long-run development prospects. Standards of quality were lowered, the care and the maintenance of equipment were neglected, and political fanatics rather than competent technicians took over the production of industrial goods." This is what the public record looks like at its most ordinary. storyflo.com. The full document is available at archive.org/download/us-china-intel-CI01572/CI01572_djvu.txt