INR-NIE files

No. 29
Special Estimate1

top secret
SE-27

Probable Effects of Various Possible Courses of Action with Respect to Communist China2

the problem

To analyze the current status and effectiveness of controls on trade with Communist China, to examine the probable effectiveness of certain additional pressures which could be applied against Communist China, and to estimate Communist reactions to these measures.

[Page 60]

assumption

A continuation of the present situation or an intensification of the fighting in Korea.

conclusions

1.
Present free world controls on exports to Communist China have not prevented the build-up of Chinese Communist military strength. However, these controls have somewhat retarded the development of Communist China’s economic potential.
2.
Even if present controls were extended and strengthened so as to effect a total embargo on non-Communist trade with Communist China, the Soviet Bloc would probably assume the costs of meeting Communist China’s most important non-military requirements without curtailing the delivery of military items so long as Western ships remained available for charter and transfer to meet Soviet Bloc shipping needs elsewhere.
3.
Imposition of a naval blockade in conjunction with a total embargo would compel Communist China to rely on overland shipments from the USSR for virtually all its imports. Such a blockade would not be effective unless it included Port Arthur and Dairen.
4.
This blockade would subject Communist China to considerable economic strain. We do not believe that, in the short run, there would be any significant reduction in Chinese Communist military capabilities or in the stability of the regime. A blockade would, however, seriously interfere with the execution of Chinese Communist long-term plans for economic development and would make it more costly for the USSR to underwrite an expansion of present Chinese Communist military capabilities or new military ventures.
5.
In conjunction with an embargo and a naval blockade, effective and sustained aerial interdiction of key elements in the Chinese Communist rail and waterways system could have an extremely serious effect on Chinese Communist military capabilities, and the problems of maintaining the regime’s political and economic controls would be greatly aggravated. Achievement of these significant results, however, would require a large-scale and sustained air bombardment campaign.
6.
Imposition of a total embargo on non-Communist trade with China would probably have no significant effects on Chinese Communist or Soviet military courses of action.
7.
Since a naval blockade would aggravate the logistical problems of Communist forces in the Far East, overland military ventures would be somewhat more difficult to undertake and overseas ventures much more difficult. On the other hand, imposition of a blockade would cause the Communists to reappraise Western intentions [Page 61]and might possibly impel them to accept new risks in Korea, Indochina, or elsewhere.
8.
The USSR might react to a naval blockade by attempting to escort merchant ships into Port Arthur and Dairen, by attempting to force the blockade at other points, or by waging mine and submarine warfare against the blockading forces. Blockading forces might also be subject to attack by the Chinese Communist Air Force.* However, the Kremlin would make its decision with regard to the blockade in the light of the global policy of the USSR, and probably would not make a determined effort to break the blockade unless the USSR was prepared to accept a major extension of hostilities with greatly increased likelihood of general war.
9.
The Chinese Communists could be expected to react to air attacks on their lines of communications by making a maximum air defensive effort which might include air attacks against US/UN bases and aircraft carriers. Soviet air units would probably participate in the air defense effort ostensibly as a part of the Communist Air Force in China. In this event, there would be an extension of the de facto air war between the US and the USSR which we have grave reason to believe already exists in Korea.

discussion

Extent of Present Controls on Trade With Communist China

10.
Most of the nations outside the Soviet Bloc apply some form of export controls against Communist China. The US has maintained a total trade and shipping embargo against Communist China ever since December 1950, while Canada and Japan have imposed restrictions almost as complete. The UK has blocked or restricted the shipment of a wide variety of strategic items, and, since July 1950, most of the Western European countries, as members of the Coordinating Committee (COCOM) on East-West trade, have applied to Communist China the selective controls put into effect against the rest of the Soviet Bloc at the beginning of that year. A great number of other nations have taken action to restrict shipments to Communist China in accordance with the UN Additional Measures Resolution of May 1951.3
11.
There has been a wide variation, however, in the contraband lists and enforcement measures being used by individual countries. Although the controls imposed by the UK and the continental COCOM countries4 are fairly comprehensive, they fall far short of the total embargo imposed by the US. Other nations have shown little uniformity in their interpretation of the UN resolution, which covers transport supplies and equipment of strategic value and items useful in war production as well as petroleum and purely military items. A number of Middle Eastern and Southeast Asian countries have made no more than a general commitment to deny strategic materials to Communist China, while India, Pakistan, Burma, and Ceylon have taken no action under the UN resolution.
12.
Shipping controls have been particularly weak. All the COCOM countries prohibit sales of ships to Communist China and have agreed to impose restrictions on sales of ships to the rest of the Soviet Bloc. These restrictions, however, have not prevented the circumvention of controls and the transfer of at least 27 vessels to Soviet Bloc flags since October 1950. Chartering controls and controls on ship construction, repairs, and bunkering are practically non-existent. Although the greater percentage of chartered vessels do not touch a Communist Chinese port, many of these vessels are employed in Western European, South Atlantic, and Indian Ocean trade, thereby releasing Communist flag vessels for direct service to Communist China. The US alone prohibits vessels of its own registry from entering the Communist Chinese supply line. Such controls, however, do not affect vessels of foreign registry which are owned and operated by persons residing within the US.

. . . . . . .

[Here follow sections estimating the effect of the existing controls on Communist China, the effect of a total embargo on non-Communist trade with Communist China, the effectiveness of a naval blockade in increasing the pressure on Communist China, the effects of bombardment of lines of communication in conjunction with a blockade, and the Communist reaction to the implementation of these measures. Two annexes consist of selected tabular data and an estimate of the short-run effects of a total embargo on specific commodities.]

  1. Special Estimates (SEs) were high-level interdepartmental reports presenting authoritative appraisals of vital foreign policy problems on an immediate or crisis basis. SEs were drafted by officers from those agencies represented on the Intelligence Advisory Committee (IAC), discussed and revised by interdepartmental working groups coordinated by the Office of National Estimates of the Central Intelligence Agency, approved by the IAC, and circulated under the aegis of the CIA to the President, appropriate officers of Cabinet level, and the National Security Council. The Department of State provided all political and some economic sections of SEs.
  2. A note on the source text reads: “The intelligence organizations of the Departments of State, the Army, the Navy, the Air Force, and the Joint Staff participated with the Central Intelligence Agency in the preparation of this estimate. All members of the Intelligence Advisory Committee concurred in this estimate on 29 May 1952.”
  3. See footnote to paragraph 41, page 9 below. [Footnote in the source text. Paragraph 41 is not printed. The footnote under reference stated that it was estimated that a naval blockade of the China coast, including Dairen and Port Arthur, would cut off 75 to 90 percent of the tonnage which would otherwise come in through smuggling and Soviet bloc ships and that such a blockade could be set up so as to avoid effective Chinese air and naval counteraction.]
  4. Participants in the COCOM include Belgium, Denmark, France, West Germany, Italy, Luxembourg, the Netherlands, Norway, and Portugal as well as the US, the UK, and Canada. [Footnote in the source text.]
  5. For text of UN Resolution 500 (V), adopted by the General Assembly on May 18, 1951, see Foreign Relations, 1951, vol. vii, Part 2, p. 1988.
  6. Discussions concerning items which should be embargoed to China had been taking place in COCOM since late 1951. Telegram 5567 from Paris, Mar. 13, reported that COCOM members had agreed on Mar. 11 to place all the items on International List II on the COCOM China embargo list; telegram 7757 from Paris, June 12, reported agreement at a June 10 meeting that all the items on International List III should be placed on the list. (493.009/3–1352 and 493.009/6–1252) Documentation concerning the COCOM discussions on this subject is in files 460.009 and 493.009.