Zhou Enlai and Stalin discuss Soviet assistance for the Chinese economy and military.
September 3, 1952
Minutes of Conversation between I.V. Stalin and Zhou Enlai
RECORD OF MEETING BETWEEN COMRADES I.V. STALIN AND ZHOU ENLAI
3 September 1952
On the Soviet side
comrs. Molotov, Malenkov, Bulganin,
Beria, Mikoyan, Kaganovich,
Vyshinskii, and Kumykin.
On the Chinese side
comrs. Chen Yun, Li Fuchun,
Zhang Wentian, and Su Yu
comrs. Fedorenko and Shi Zhe.
After an exchange of greetings the discussion began with the question of the Five-Year Plan of the People's Republic of China.
Stalin. We have familiarized ourselves with your Five-Year Plan for construction. You are setting the yearly growth at 20%. Is not the setting of yearly industrial growth at 20% strained, or does the 20% provide for some reserve margin?
Zhou Enlai draws attention to the fact that they do not yet have sufficient experience in such planning. The experiences of the past three years has shown that the PRC is underestimating its capabilities. The feasibility of the plan will depend on the efforts of the Chinese people and on the assistance that China is counting on receiving from the USSR.
Stalin. We draft the Five-Year Plan with a reserve margin, as it is impossible to take into account every instance. There are various reasons that may affect the plan in one direction or another. We always include the civil and military industries in the plan. The PRC Five-Year Plan does not. In addition, it is necessary to have the complete picture of all expenditures provided by the plan.
We must know how much is required from us on a paragraph by paragraph basis. It is necessary to do the calculations. The given documents do not contain such data. Hence we cannot give our final answer. We need at least two months in order to do the calculations and tell you what we can provide you.
Usually it takes us at least a year to prepare our Five-Year Plan. Then we analyze the prepared draft for another 2 months, and still we manage to let mistakes go by.
We would like you to give us some two months to study your plan, so that we could answer your questions.
How do things stand in other matters? It seems that the question of Port Arthur has been examined. In that case we need to make a decision. If there are any sort of objections then they should be discussed right now.
In addition, it seems that there are also no objections to the draft communique on the transfer of KChZhD [China Changchun Railway].
The third question concerns hevea [rubber] trees. We would like to receive from you 15 to 20 thousand tons of caoutchouc [natural rubber] each year. You, it seems, object, citing difficulties. The fact is that we have a tremendous need for caoutchouc, since automobiles and trucks, which are also being sent to you, require large amounts of rubber. We would like to receive at least 10-15 thousand tons of caoutchouc. We have not much opportunity to buy caoutchouc, since Britain keeps it to itself. We ask you to reexamine the question of purchasing for us the necessary amount of caoutchouc.
If all these questions get resolved, then the remaining can be decided with other delegation members, as it seems that Zhou Enlai is hastening to return.
Zhou Enlai says that it's difficult for him to remain here for two months, that he would like to return to China in mid-September. [Vice chairman of the Northeast (China) People's Government] Li Fuchun can remain here.
There still remains the question of constructing the new Ulan-Bator-Pinditsiuan railroad. The Mongolian Premier, who was just here in Moscow, has given his approval.
In other words, four questions remain to be decided by Zhou Enlai: Port Arthur, KChZhD, caoutchouc, and the construction of the new Ulan-Bator-Pinditsiuan railroad.
Zhou Enlai referring to the hevea question, says that they will take all measures in order to provide USSR with 15-20 thousand tons a year, but they are apprehensive that the blockade and other measures directed against China by its enemies may prevent it from fulfilling this commitment in full. The delegation is apprehensive that this may be seen as a breach of its commitments to the Soviet Union.
[He] repeats that they will take all measures to fulfill this commitment, but would like to reserve the right to explain the reasons and not be held in breach of its commitments, if in extraordinary cases the shipment falls short of what was promised.
Stalin says that he understands this. We can soften the wording in the agreement, by saying that China will strive in every possible way to realize the shipments of the stated amount. But if it is unable to deliver caoutchouc in the amount stipulated, then we will have to decrease the number of trucks ordered.
Asks jokingly whether President Ho Chi Minh might not be able to help in this matter.
Zhou Enlai notes that China has many options in this regard (mostly through contraband).
[He] returns to the question of the construction of the new railroad. Notes that here are no objections.
Stalin notes that they can make public announcements on Port Arthur and KChZhD, but not on hevea, and only make announcements on the Ulan-Bator-Pinditsiuan railroad once it has been completed.
Zhou Enlai expresses agreement with this and returns to the question of the Five-Year Plan. Again emphasizes that they are underestimating their capabilities. He agrees that it is difficult to perceive the Five-Year Plan as a general picture, as it does not include the military, since they are having difficulties with military planning. Overall, they are unsure whether to include the military in the general plan. As for publishing the Five-Year Plan, they were not intent on publishing the plan itself, only its general trends.
Stalin explains that our Five-Year Plans are published and that we include incognito articles dealing with military technology production, chemical and other industries. The publication of the plans is essential, if the people are to comprehend the scope of development. There must be numbers. It is not advisable to limit oneself by publishing solely its general trends. There are people who want to know and behold the entire scope of development as specified in the Five-Year Plan. That's why it is necessary to provide for military production in this plan, though without naming military enterprises and such. It will be better thus. There must be a single, unitary plan that includes both civil and military development.
As far as the USSR is concerned, we, as the provider, must also know in what capacity and what type of assistance will be required of us. There is but one source - the USSR. But we need a reckoning for both the civil and military sectors. We must know and calculate every portion of the entire sum.
Let's say that in 1953 we provide weapons for 10-15 divisions. We need to know how much steel and other materials will be needed to fulfill this order. During that same year 1953 we must supply a certain amount of equipment for the civil sector. This must also be calculated. Then both sums, the civilian and the military, must be combined to determine whether we will be able to supply the entire amount. This is how a plan must be drafted for each and every year. Perhaps our Chinese comrades believe that all these weapons are lying around somewhere in a warehouse. No, they must be produced.
Zhou Enlai completely agrees with everything laid out by comrade Stalin, and will ascertain how the matter of the [weapons shipments for] 60 divisions will rest. If they will be billed to credit, then that will also have to be specified.
Cmrd. Mao Zedong had an idea - if the war in Korea were to continue for another year or two, then would it be possible to extend the duration of shipments for 20 divisions to next year?
Stalin says that right now it's difficult to say. Perhaps it will have to be shortened, perhaps not. It needs to be calculated. The calculation will tell us. Nothing here can be determined beforehand.
Zhou Enlai turns to the question of naval-military shipments. Asks whether these need to be included in the plan or not. Roughly speaking these shipments need to be delivered over the next six years. Will the previous arrangement remain in force?
Stalin. Everything which we have agreed to - military and naval-military shipments - will remain in force. But this must be taken into account when determining the total number of shipments. We are not repealing any loans nor rescinding any agreements. In general, we find it unconscionable to run from the responsibilities that one has taken upon himself. Once an agreement has been signed, it is imperative to abide by it, and we will abide by it.
Zhou Enlai says that cmrd. Mao Zedong has entrusted him to present the general outline of the Five-Year Plan and to ascertain how much will have to be ordered from the Soviet Union for the civilian and military industries. They project 7,700 mln. rubles for the civilian industry, and 4,500 mln. rubles for the military. Mao Zedong asked to ascertain if this is a suitable ratio, if the military portion is not too great.
Stalin. This is a very unbalanced ratio. Even during wartime we didn't have such high military expenses.
Zhou Enlai says that the 4,500 mln. rubles earmarked for military orders are composed of the following: weapons for 60 divisions - 985 mln. rbls., military-naval shipments - 2,126 mln. rbls., aviation - 1,200 mln. rbls., and others.
Emphasizes that under normal conditions the ratio between the military and civilian sectors is not so unbalanced. The military portion is smaller.
Stalin. During wartime our military production constituted about 40-45%, but China doesn't have a real war on its hands. However, shipments for the air and naval forces are necessary. Perhaps Mao Zedong is right about the ratio of 7.7 bln. rbls. to 4.5 bln. rbls.
Zhou Enlai informs that in 1950 expenses for the military constituted 44% of the entire budget (4.2 bln. rbls.), in 1951 - 52% (8 bln. rbls.), in 1952 - 27.9% (6.6 bln. rbls.). Says that, according to the Five-Year Plan, investments in the military industry (munitions arsenals, aviation, tank production, military shipbuilding) constitute 12-13% of all industrial investments. If comrade Stalin believes that such a ratio is acceptable, then they will use that as the basis when drafting their general requisitions list.
Stalin. Good. It is acceptable.
Zhou Enlai says that at first they projected constructing 151 industrial enterprises, but now they have dropped this number to 147, excluding military arsenals (aero-manufacturing enterprises, tank enterprises, shipbuilding enterprises). Explains that these 147 enterprises are not military, though they serve military needs.
Stalin. We usually build few new enterprises; we try to expand existing ones. It's more economical. However, China will have to build new ones, since there aren't enough existing ones. During the war we converted aero-maintenance shops into aero-manufacturing plants, and automobile factories into tank factories. We frequently resorted to inter-enterprise cooperation, producing parts in various enterprises and then assembling them. China ought to try this method. It is simpler than building special factories.
Zhou Enlai says that during the civil war years they also made use of cooperation among enterprises in the manufacture of light weapons, but now they are embarking upon the manufacture of heavy weapons, and that requires creating a base.
Shifts to the question of how to cover the cost of the trade imbalance between the Soviet Union and China. Says that there are 3 ways to cover this cost: 1) increase Chinese exports to the USSR; 2) receive payments in foreign currency - dollars, pound sterling, Hong Kong dollars, Swiss francs; 3) credit. Asks which of the three options is most acceptable.
Stalin. Perhaps it will be necessary to make use of all three.
Zhou Enlai says that they are planning to increase exports to the USSR to 13 bln. rubles. We can supply cattle, leather, fur, wool, silk, mineral resources, and foodstuffs: beans, fats, tea.
Notes that over five years they could collect up to 200 mln. American dollars, as well as 1.6 bln. British pound sterling, Hong Kong dollars, and Swiss francs.
Stalin. American dollars are preferable. British pound sterling have limited circulation. As for Hong Kong dollars, you should consult our Ministry of Finance.
The Soviet Union needs lead, wolfram [tungsten], tin, and antimony. We would like you to increase the deliveries of these.
Notes that we would also accept lemons, oranges, and pineapples which the Soviet Union buys from other countries.
Zhou Enlai says that the loan of 4 billion rubles that they would like to receive from the USSR consists of the following: 985 mln. rbls. - weapons shipments for 60 divisions; 2,126 mln. rbls. - military-naval shipments; 100 mln. rbls. - caoutchouc; 800 mln. rbls. - industrial equipment.
Stalin. We will have to give something, though the exact amount must be calculated. We cannot give four billion.
Zhou Enlai says that this amount does not include aviation. They intend to pay cash for aviation.
Stalin. The question here is not in the monetary amount, but in whether we will be able to produce this much equipment. All that will have to be determined, which will take some two months.
Zhou Enlai shifts to the question of specialists. Says that beginning with 1953, China will need new specialists in the following fields: financial and economic matters - 190 people, military - 417, medical school instructors and others - 140. In addition, they will also need specialists for the military industry, though this matter is still being studied.
Stalin. This will have to be examined: what specialists, in which fields and with what profiles. We will send some, though it's difficult to say how many.
Have you found the Soviet specialists currently working in China useful?
Zhou Enlai responds that they are very useful.
Asks whether comrade Stalin has any remarks to make on the recently submitted report.
Stalin. The impression is a positive one. China is growing. China must become the flagship of Asia. It must in its turn supply other countries with specialists.
Zhou Enlai notes that the report contains a footnote, specifying that in the event the war ends, we would like to create an army of 3,200 thousand people, with 102 divisions.
Stalin. That's good. But that's the minimum. China must be well armed, especially with air and naval forces.
Zhou Enlai. We project on having 150 air regiments with 13,000 flight personnel.
Stalin. That's too few. You'll have to add some. You should have 200 air regiments.
Zhou Enlai. Then we will have to increase the number of flight personnel.
Stalin. That's right. You will probably have to shift to three-regiment divisions. That's more economical - less division staff.
Zhou Enlai asks whether there needs to be a certain ratio maintained between fighter jets and reciprocating engine planes.
Stalin says that reciprocating engine fighter-planes should be gradually retired and replaced by jets. Fighter jets have a speed of 800 kilometers. Pilots should be trained on reciprocating engine planes and then transferred to jet planes. Reciprocating engine planes should be completely retired over the next two years. We will give you new fighters with speeds of 1000-1100 km/h. You must not fall behind in this matter.
Zhou Enlai raises the question of providing China with technical documentation for the manufacture of the following weapons: 122mm howitzers, 37mm guns and 67.2mm field guns.
Stalin says that the blueprints can be provided.
Zhou Enlai asks whether they should immediately begin the construction of tank factories or build automobile and tractor factories first, and then convert them to tank production.
Stalin responds that some sort of a tank manufacturing plant should be built. Such a plant could be gradually expanded. As for automobile factories, you definitely need more of them.
Zhou Enlai says that they will redraft their Five-Year Plan and will seek our advice; the redrafted materials will be submitted to comrade Molotov.
Stalin advises to fix the overall growth [rate] at 15%, and at 20% for yearly plans. Notes that that would be a plan with a reserve margin. Points out the importance of giving the workers a slogan for over-fulfilling the plan. Such a plan can be over-fulfilled. Says that this is exactly how we draft our plans, with a certain reserve margin, since there is a possibility of having unfavorable circumstances. You can't plan for everything.
Stalin expresses interest in the production of naval mines in the PRC.
Zhou Enlai responds that plans for a naval mine factory are being drafted.
Stalin points out the importance of defending Chinese sea ports.
Inquires about the situation in Macao.
Zhou Enlai replies that Macao continues, as before, to be in Portugal's hands.
Stalin says that this scum that has situated itself on the very entrance to China must be driven out.
Zhou Enlai says that in their relations with Southeast Asian countries they are maintaining a strategy of exerting peaceful influence without sending armed forces. He offers the example of Burma, where PRC has been trying to influence its government through peaceful means. The same in Tibet. Asks whether this is a good strategy.
Stalin. Tibet is a part of China. There must be Chinese troops deployed in Tibet. As for Burma, you should proceed carefully.
Zhou Enlai says that the Burmese government is concealing its true position with regard to China, but is actually maintaining an anti-China policy, orienting itself with America and Britain.
Stalin. It would be good if there was a pro-China government in Burma. There are quite a few scoundrels in the Burmese government, who make themselves out to be some sort of statesmen.
Zhou Enlai explains that Chinese troops were deployed in Tibet a year ago, and are now at the Indian border. The question of whether there should be Chinese troops in Tibet is moot.
Emphasizes that maintaining communication with Tibet is difficult. In order to communicate with Lhasa one needs 4-motor transport planes, equipped with oxygen tanks and de-icing devices. Could not the Soviet Union provide such planes? 2-motor planes can go 3/5 of the way, but that's as far as they'll go.
Stalin replies that Soviet Union can assist with this.
Zhou Enlai. In that case could China request 20 4-motor planes from the USSR?
Stalin replies that first we will provide 10, and then another 10.
Points out the importance of building a road to Tibet.
Zhou Enlai says that such a road is being built, but that its construction will take up all of next year and part of 1954.
Stalin notes that without a road it's difficult to maintain the necessary order in Tibet. Tibetan Lamas are selling themselves to anyone - America, Britain, India - anyone who will pay the higher price.
Zhou Enlai says that, indeed, the Lamas are hostile. This year (February, March, April) they were planning a rebellion, but the Chinese People's Government was able to suppress the rebels.
Notes that as a result of this, the Dalai Lama's brother fled abroad.
Stalin says that a road to Tibet must be built, and that it is essential to maintain Chinese troops there.
At the end of the discussion a meeting was arranged for 4 September, at 9 o'clock in the evening.
A. Vyshinskii [signature]
N. Fedorenko [signature]
Conversation between Stalin and Zhou Enlai on the Chinese Five-Year Plan, the Ulan-Bator-Pinditsiuan railroad, and arms sales/production. They also discussed the Korean war, Burma, and Tibet.
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