(3 September 1952)
is the second conversation between Stalin and Zhou Enlai which deals
with the financial, economic and military questions of the two
countries. The final, third discussion, will be given in the next issue
Top Secret. Copy 1
To Comrade STALIN I.V.
I present your conversation with Zhou Enlai of 3 September this year in this record.(Signature of A. Vyshinsky)
3 September 1952Present:
From the Chinese side – Comrades Chen Yun, Li Fuchun, Zhang Ventyan, Su Yu.
After exchanging greetings the conversation started with the question of the Five Year Plan of the Chinese People’s Republic.
Stalin. We have got acquainted with your plan of five year construction. You set an annual growth of 20%. Is not the establishment of a 20% annual growth a strain for industry or have you provided any reserve taking into consideration a 20% growth?
Zhou Enlai pays attention to the problem that the Chinese specialists do not have enough experience in making plans. The experience of the three past years showed that the PRC underestimates their possibilities. The reality of the plan will depend on efforts of the Chinese people and the help which China expects to receive from the USSR.
Stalin. We draw up a five-year plan with a reserve, as it is impossible to consider all the moments. There are different factors that influence one direction or another. We always include civil and military industry in the plan. China does not have it in its five-year plan. Meanwhile, it is necessary to have a complete picture of all costs associated with the Plan. We have to know what we require in all respects. It is necessary to make the estimates. However in the submitted materials such data are not contained. In this connection we cannot give you our final opinion. We need at least two months to calculate and say what we can provide you with. Usually we work on our five-year plan for four years at least. Then we consider the prepared draft for two months more and still there can be some mistakes. We would like to have some two months to examine your plan to give you answers to all your questions. What about other questions? The question on Port Arthur has been prepared, has not it? In this case we have to make a decision. If there are any objections then they have to be discussed right away. The draft communique on the transfer of the CER seems to have no objections. The third question is Hevea. We would like to receive 15 to 20 thousand tons of rubber from you annually. You seem to object, referring to difficulties. The matter is that we need rubber badly as a large quantity of rubber is required for cars and trucks, which are sent to you as well. We would like to get at least 10-15 thousand tons of rubber. We purchase little rubber; the British hold it in their hands. We ask you to consider the question to purchase the required amount of rubber for us. If all these questions are solved, the rest of problems will be able to be solved with the other members of the delegation as Zhou Enlai hurries to go back. Zhou Enlai says it is difficult for him to stay here for two months; he would like to return to China in the middle of September.
Zhou Enlai. Li Fuchun can stay here.
Stalin. Alright. There is still a question on the construction of a new railway Ulan Bator-Pinditsyuan. The Mongolian Prime Minister, who arrived in Moscow, also approves this matter. It means there are four questions left to be solved with Zhou Enlai: Port- Arthur, CER, hevea and the construction of a new railway Ulan Bator-Pinditsyuan.
Zhou Enlai relating to hevea says that they will take all measures to ensure that the Soviet Union is supplied 15 to 20 thousand tons per year, but they fear that the blockade and other measures directed by the enemies against China can prevent this task from being fully accomplished. The delegation fears that it may be concerned as a violation of the obligations to the Soviet Union. He repeats that they will take all measures to fulfil the task; however they would like to have a right in exclusive cases to explain the reasons when the supplies are not ensured in the required quantity and this would not be considered as a violation on their part of the obligations assumed.
Stalin says that he understands the matter. The wording can be softened in the communique stating that the Chinese part will make every effort to ensure delivery in the specified volume.
And if you fail to supply the due amount of rubber, we will have to reduce the order for trucks. Jokingly asks, if President Ho Chi Minh can help in this matter.
Zhou Enlai replies to this, that China has big opportunities in this matter (mainly smuggling). He returns to the question on construction of a new railroad. He points out that there are no disagreements here.
Stalin points out a message can be published on Port-Arthur and the CER, not to mention hevea, and to publish the message on the Ulan Bator- Pinditsyuan railroad when it is built.
Zhou Enlai agrees to it and returns to the question on the five-year plan. He again underlines that they underestimate their opportunities. He agrees that it is difficult to make a general opinion on a five-year plan as military questions are not included into it, however in the question on military requirements they are having many difficulties. It is not clear for them at all if to include military questions into a general plan. As for publishing the five-year plan, they do not intend to publish the five-year plan, but to publish only general directions of this plan.
Stalin explains that our five-year plans are published and we secretly include military items in engineering, chemical and other industries. Publishing of the plans is necessary for the people to clear understand the immense scale of construction. There must be figures. You should not limit the publication by the main directions only. There are people who want to know and see the general scale of construction provided by a five-year plan. That is why it is necessary to envisage military construction, but military enterprises should not be named, etcetera. It will be better in this way. The plan must be single: it must include both civic and military construction. As far as the USSR is concerned, we, as a supplier, must know what kind of assistance do you need and what for? The source is one- the Soviet Union. However we need calculation on both civic and military parts. We need to know, to calculate the general sum by all parts. Say, in 1953 we are supplying weapons for 10-15 divisions. We have to know how much steel and other materials we need to fulfil this order. In the same 1953 year we have to provide a certain quantity of civic equipment. It must be also calculated. Then we have to sum up both numbers on civic and military parts and determine if we can provide supplies in these volumes.
And according to this to build a plan for every year. The Chinese Comrades might think we have all these weapons are lying somewhere in a stock. No, weapons must be manufactured.
Zhou Enlai fully agrees to everything Comrade Stalin has said and tries to find out about 60 divisions. If they go along the credit line, it must be envisaged. Comrade Mao Zedong had a thought – if the war in Korea continued for a year or two could the deadline of supplies for 20 divisions be prolonged to the next year?
Stalin says, it is difficult to say right away. We might have to reduce or we might not have to reduce. It must be calculated. Calculation will show. It is impossible to prejudge anything here.
Zhou Enlai turns to naval supplies. He asks if they need to be included into the plan or picked out? Approximately these supplies must be going for six years. Is the previous agreement in force?
Stalin. Everything we have agreed on – military and naval supplies – everything remains in force. But it must be considered when determining the total amount of supply. We do not cancel any loans or refuse any agreements. In general we consider it unacceptable to abandon the assumed commitments. If the agreement is concluded, it is necessary to fulfil it and we fulfil it.
Zhou Enlai says that Comrade Mao Zedong instructed him to report on the overall outlining of the five-year plan and find out how much will it need to be ordered from the Soviet Union in total industry and in the military one. They scheduled in the total industry for 7700 million rubles, and the military for 4500 million rubles. Mao Zedong asked to find out if this proportion was correct was not the military unit too great?
Stalin. It is a very taut figure. Even during the war we did not have such a high figure of military costs
Zhou Enlai says that 4500 million rubles for military orders consist of the following items: 60 divisions – 985 million rubles, naval supplies – 2126 million rubles and aviation – 1200 million rubles, etcetera. He points out that under usual conditions the ratio between the military and the industrial part is not as intense. The military part of expenditure is less.
Stalin. During the war our military production amounted to 40-45%, however, there is no real war in China. Nevertheless aviation and naval force supplies should be provided. Perhaps Mao Zedong is right in proportion of 7.7 billion rubles to 4.5 billion rubles.
Zhou Enlai informs that the budget costs on military purposes in 1950 amounted to 44% of the entire budget (4.2 billion rubles), in 1951 – 52% (8 billion rubles), in 1952 – 279% (5.6 billion rubles). He says that the five-year investment plan in the military industry (arsenals, aircraft, tank building, military shipbuilding) constitute 12-13% of all contributions to the industry. If Comrade Stalin considers such a ratio to be acceptable, they will proceed from this in the preparation of their general application.
Stalin. Alright. It is acceptable.
Zhou Enlai says that first construction of 151 industrial enterprises was planned, presently they reduced this figure to 147 enterprises without counting military arsenals (aircraft industry enterprises, tank enterprises, shipyards enterprises), he explains that these 147 companies are not military, but they serve military needs.
Stalin. We usually build new enterprises on a small scale; we try to expand the old ones. It is more economical. In China it is vice versa: you will have to build new ones as there are not enough old ones. During the war we turned aircraft repair workshops into aircraft factories, car factories – into tank building plants. We widely used cooperation between enterprises – we manufactured parts in different enterprises and then assembled them. China should use the same way. It is easier than construction of special plants.
Zhou Enlai says that during the civil war they also used cooperation methods on manufacturing of light weapons, but presently they start manufacturing of heavy weapons and it is necessary to build a base for it. He turns to the problem of ways of covering the difference, which is formed on supplies from the Soviet Union to China and from China to the Soviet Union. He says that there are three ways of covering this difference: 1) increase of the Chinese exports to the USSR; 2) payments in foreign currency – dollars, pounds sterling, Hong Kong dollars, Swiss francs; 3) credit. He asks which of these ways is the most acceptable.
Stalin. Perhaps, we will have to use all three ways.
Zhou Enlai says that they are planning to increase exports to the Soviet Union up to 13 billion rubles. We can supply cattle, leather, fur, wool, silk, minerals, food: beans, fats and tea. He points out that during five years they could rise up to 200 million American dollars and 16 billion British pounds sterling, Hong Kong dollars and Swiss francs.
Stalin. American dollars are preferable. The British pound sterling has a limited circulation. It is necessary to consult our Finance Ministry on the question of the Hong Kong dollars. The Soviet Union badly needs lead, tungsten, tin, antimony. It is desirable to increase the supply in this respect. He points out that we could also take lemons, oranges, pineapples which the USSR imports from other countries.
Zhou Enlai says that the general credit which they wanted to get from the Soviet Union would consist of 4 billion rubles on the following calculation: 985 million rubles – for 60 divisions; 2,126 million rubles – for the naval supplies; 100 million rubles – for hevea; 800 million rubles – for the industrial machinery and equipment.
Stalin. We will have to give the credit, but it should be counted – how much. We will not be able to give four billion.
Zhou Enlai says that aviation is not included into this calculation. They intend to pay aviation costs in cash.
Stalin. The matter does not lie in a figure, but in the matter – if we will be able to manufacture this much of equipment. We must find it out. It will take two months.
Zhou Enlai turns to the question of application on specialists. He says that starting from 1953 China will need 190 new specialists in finance- economy matters; 417 specialists in military matters; 140 teachers for medical schools and others. Apart from that specialists for military industry will be needed, but this question is still under consideration.
Stalin. We need to consider: what kind of specialists, of what specialities and profiles. We will give, but it is difficult to say what quantity. Are the Soviet specialists working in China beneficial?
Zhou Enlai responds that they are very beneficial. He asks, if there are any remarks from the side of Comrade Stalin regarding the presented report?
Stalin. Impression is good. China is growing. China must turn into the Asian arsenal. It must provide for the specialists other countries in future.
Zhou Enlai points out that there is a note in the report that in case of stopping the war we would like to create an army of 3200 thousand people, 102 divisions.
Stalin. It is good. But this is the minimum. China must be well armed especially with aviation and navy.
Zhou Enlai. We are thinking of having 150 aviation regiments with 13,000 people.
Stalin. It is little. You have to add more. You should have 200 aviation regiments.
Zhou Enlai. Then we will have to increase aircrews.
Stalin. You will. You will probably have to move to thee regiment divisions. It is more economical, you need less divisional apparatuses
Zhou Enlai asks if it is needed to comply with any proportion between fighter jets and piston.
Stalin says that piston jets should be gradually stopped and China should turn to fighter jets. Jets have a speed of 800 kilometres. Pilots need to be trained in piston aircraft, and then turn them on the jets. Piston type should be withdrawn completely within one or two years. We will give you new fighters with a speed of 1000-1100 km/h. It is impossible to lag behind in this case.
Zhou Enlai sets a question on giving a technical documentation on manufacturing weapons: 122 mm howitzers, 37 mm cannons and 6 7, 2 mm field guns to China.
Stalin says that blueprints can be given
Zhou Enlai asks if tank plants should be built first or car plants and tractor enterprises should be built first and then should be turned into plants manufacturing tanks.
Stalin responds that a certain tank manufacturing plant should be built. Such a plant can be gradually expanded. As for car manufacturing plants, their number must increase.
Zhou Enlai says that they will remake their five-year plan and ask for advice; the new materials will be presented to Comrade Molotov.
Stalin advises to set 15% for general growth and in the annual plans – 20%. He points out that in this case the plan will be with a reserve. He point out the necessity to put forward a slogan of over-fulfilment of the plan in front of the toiling masses. Then such a plan can be over-fulfilled. He says that we draw our plan exactly in this way, with a certain reserve as any adverse conditions may occur. It is impossible to take everything into account. Stalin is interested in the production of sea mines in the PRC.
Zhou Enlai responds that the project of the construction of the plant on manufacturing sea mines is being designed.
Stalin points out that it is necessary to defend the Chinese sea ports. He asks how is the situation with Macau.
Zhou Enlai responds that Macau still stays in the hands of Portugal.
Stalin says that these swine located at the very entrance to China need to be kicked out.
Zhou Enlai says that regarding the countries of South-East Asia they stick to the following tactics – not to send troops, but to deal with these countries in a peaceful way. He gives the example of Burma, the government of which PRC tries to influence peacefully. The same with Tibet. He asks if this policy is correct.
Stalin. Tibet is a part of China. China needs to have Chinese troops in Tibet. And relating to Burma actions must be more cautious.
Zhou Enlai says that the Burma government hides its true position in respect of China, but in reality they wage an anti-Chinese policy, being oriented towards the Americans and the British.
Stalin. We would like Burma to have a pro-Chinese government. There are a big number of crooks posing as some figures in Burma government.
Zhou Enlai explains that the Chinese troops were driven to Tibet a year ago and presently stay on the Indian border. Presence of the Chinese troops in Tibet is an undisputed question. He points out that contact with Tibet is difficult to maintain. For communication with Lhasa 4-motor transport aircraft equipped with oxygen apparatus and anti-icing devices are needed. Cannot the Soviet Union give such aircraft? 2-motor airplanes fly only 3/5 of the way and cannot fly further.
Stalin responds that the Soviet Union can help with this problem.
Zhou Enlai asks if it is possible for China to place an order for 20 4-motor airplanes with the Soviet Union?
Stalin responds that first we will give ten airplanes and then ten airplanes more. He points out the necessity to build a road to Tibet.
Zhou Enlai says that such a road is under construction and this construction will take the whole coming year and partly 1954.
Stalin remarks that it is difficult to maintain a good order in Tibet without a road. The Tibetan lamas can be sold to anyone – the Americans and the British, and the Indians – to everyone who pays the most.
Zhou Enlai says that lamas are really hostile. His year (February, March, April) they were preparing a riot! But the Chinese People’s government managed to suppress the rioters. He points out that as a result the brother of the Dalai Lama fled abroad.
Stalin says that the road to Tibet must be built and the Chinese troops are necessary to be kept there. In the end of the conversation both parties agreed to a meeting on September 4 at 9:00 pm.
Translated by: Comrades Fedorenko and Shi Zhe.
“Krasnaya Zvezda” 16.IX.52, No. 220
In honour of the government delegation of the People’s Republic led by the Premier of the State Administration Council of the People’s Republic of China, Zhou Enlai and the government delegation of the Mongolian People’s Republic, headed by Prime Minister Yu Tsedenbal
On September 15 the Chairman of the Council of Ministers of the USSR, Stalin gave a dinner at the Kremlin in honour of the government delegation of the People’s Republic led by the Premier of the State Administrative Council and the Minister of Foreign Affairs of the People’s Republic of China, Zhou Enlai and the government delegation of the Mongolian People’s Republic, headed by the Prime Minister Yu. Tsedenbal.
From the Chinese side the dinner was attended by Zhou Enlai, Deputy
Chairman of the Financial and Economic Committee of the State Administrative Council Li Fuchun, Ambassador Extraordinary and Plenipotentiary of China to the USSR Zhang Ventyan, Deputy Chief of the General Staff of the People’s Revolutionary Military Council Su Yu, Minister of Heavy Industry Wang Haoshow, Minister of Fuel Industry Chen Yu, Head of the Secretariat of Finance and Economic Committee Yun Shaoven, Commander of the Air Force of PRC Liu Yalow, Deputy Commander of the Navy of PRC Luo Shunchu, Deputy Commander of the Artillery of China Qiu Chuanchen, Deputy Minister of Machine Building Industry Wang Daohan, Deputy Minister of Post, Telegraph and Telephone Van Zheng, Political Secretary of the Foreign Ministry of PRC Shi Zhe, Head of the department of the USSR and Eastern Europe of the Foreign Ministry of PRC Xu Yixing, Head of the Asian Division of the Foreign Ministry of PRC Chen Tszyakan, Counsellor of the Embassy of PRC Ge Baotsyuan, Commercial Counsellor of the Embassy Li Qiang, Military Attache of the PRC in the USSR Major General Di Hye.
The dinner was also attended by the Prime Minister of Mongolia Yu. Tsedenbal, Deputy Minister of Foreign Affairs of the MPR, J. Samba, Ambassador Extraordinary and Plenipotentiary of the MPR to the USSR N. Idamzhab.
On the Soviet side the dinner was attended by V.M. Molotov, G.M. Malenkov, L.P. Beria, K. E. Voroshilov, A. I. Mikoyan, N.A. Bulganin, L.M. Kaganovich, N.S. Khrushchev, L. Z. Saburov, J.F. Tevosyan, V.A. Malyshev, M.G. Pervukhin, V.V. Kuznetsov, A.Y. Vyshinsky, Marshal A.M. Vasilevsky, A.G. Zverev, N.G. Kuznetsov, S.D. Ignatiev, P.N. Kumykin, Deputy Military Minister M.I. Nedelin, Deputy Minister of Foreign Affairs B.F. Podtserob, Soviet Ambassador to China A.S. Panyushkin, Soviet Ambassador to the MPR G.I. Ivannikov, Deputy Minister of Foreign Trade S.A. Borisov, A.A. Pavlov, K.I. Koval, Colonel-General M.S. Malinin, Vice-Admiral V A. Fokin, Soviet trade representative in China V.P. Migunov, Member of the Board of the Foreign Ministry of the USSR N.T. Fedorenko.
The dinner occurred in a warm and friendly atmosphere.
RGASPI F. 558, Op. 11, D 329, LL. 75-88.
Translated from the Russian by Dr. Elena Lavrina.Click here to return to the September 2014 index.