offices of the commission chairman and of the director should be replaced by Chinese cadres. However, given comrade Molotov's proposals, this question requires more thought.

Stalin: If we are talking about joint administration, then it is important that the replacements for the managing position be alternated. That would be more logical. As for the duration of the agreement, we would not be against shortening it.

Zhou Enlai: Should we not change the ratio of capital investment by each side, by increasing the level of Chinese investment to 51%, instead of the current requirement for parity?

Molotov: This would go against the existing provision for parity.

Stalin: We do indeed have agreements with the Czechs and the Bulgarians which provide for parity and equal-footing for both sides. Since we already have joint administration, then we might as well have equal participation.

Mao Zedong: The question needs to be further examined, keeping in mind the interests of both sides.

Stalin: Let us discuss the credit agreement. We need to officially formalize that which has already been agreed to earlier. Do you have any observations to make?

Mao Zedong: Is the shipment of military arms considered a part of the monetary loan?

Stalin: This you can decide yourself: we can bill that towards the loan, or we can formalize it through trade agreements.

Mao Zedong: If the military shipments are billed towards the loan, then we will have little means left for industry. It appears that part of the military shipments will have to be billed towards the loan, while the other part will have to be paid with Chinese goods. Can't the period of delivery of industrial equipment and military arms be shortened from 5 to 3-4 years?

Stalin: We must examine our options. The matter rests in the requisition list for our industry. Nevertheless, we can move the date that the credit agreement goes into effect to 1 January 1950, since the shipments should begin just about now. If the agreement specified July 1949 as the time for the commencement of the loan, the international community would not be able to understand how an agreement could have been reached between the Soviet Union and China, which

at the time did not even have its own government. It seems that you should hasten somewhat to present the requisition list for industrial equipment. It should be kept in mind that the sooner such a list is presented, the better for the matter at hand.

Mao Zedong: We believe that the conditions of the credit agreement are generally favorable to China. Under its terms we pay only one percent interest.

Stalin: Our credit agreements with people's democracies provide for two percent interest. We could, says comr. Stalin jokingly, increase this interest for you as well, if you would like. Of course, we acted under the premise that the Chinese economy was practically in ruin.

As is clear from the telegrams that we have received, the Chinese government intends to use its army in the reconstruction of its economy. That is very good. In our time we also made use of the army in our economic development and had very good results.

Mao Zedong: That's right. We are drawing on the experience of our Soviet comrades.

Stalin: You raised the question of China receiving a certain amount of grain for Xinjiang?

Mao Zedong: Wheat and textile. Stalin: For this you need to come up with the necessary requests that include numbers.

Mao Zedong: Very well, we shall prepare these.

How shall we proceed with the trade agreement?

Stalin: What is your opinion? Up until now we have only had a trade agreement with Manchuria. We would like to know what sort of a situation we should look forward to in the future: will we be signing separate agreements with Xinjiang, Manchuria and other provinces, or a single agreement with the central government?

Mao Zedong: We would like to have a single, central agreement. But in time Xinjiang may have a separate agreement.

Stalin: Just Xinjiang; what about Man

churia?

Zhou Enlai: A separate agreement with Manchuria can be ruled out, since in the agreement with the central government China's obligations would in essence be fulfilled by shipments made from Manchuria.

Stalin: We would like the central government to sanction and take the responsibility for the agreements with Xinjiang or Manchuria.

Mao Zedong: The agreement with Xinjiang must be signed in the name of the central government.

Stalin: Right, since [a] provincial government might not take many things into account, whereas things are always clearer to the central government.

What other questions do you have?

Mao Zedong: At the present time the main question is economic cooperation - the reconstruction and development of the Manchurian economy.

Stalin: I think that we will entrust the preparation of this question to comrs. Mikoyan, Vyshinskii, Zhou Enlai, and [CCP CC member and Vice Chairman of Finance and Economics Commission] Li Fuchun. Any other questions?

Mao Zedong: I would like to note that the air regiment that you sent to China was very helpful. They transported 10 thousand people. Let me thank you, comrade Stalin, for the help and ask you to allow it to stay a little longer, so it could help transport provisions to [CCP CC member and commander of the PLA's Second Field Army] Liu Bocheng's troops, currently preparing for an attack on Tibet.

Stalin: It's good that you are preparing to attack. The Tibetans need to be subdued. As for the air regiment, we shall talk this over with the military personnel and give you an answer.

The meeting took two hours.

Present at the meeting were comrs. Molotov, Malenkov, Mikoyan, Vyshinskii, Roshchin, Fedorenko and Mao Zedong, Zhou Enlai, Li Fuchun, [PRC Ambassador to the USSR] Wang Jiaxiang, [CCP CC member] Chen Boda, and Shi Zhe /Karskii/.

RECORD OF CONVERSATION

BETWEEN COMRADE

I.V. STALIN AND ZHOU ENLAI

20 August 1952

Present:

On the Soviet side

comrs. Molotov, Vyshinskii, Fedorenko.

On the Chinese side comrs. [Vice Premier] Chen Yun, Li Fuchun, [PRC Ambassador to the USSR] Zhang Wentian, [Deputy chief of staff] Su Yu

Translated by

comrs. Fedorenko and Shi Zhe

Zhou Enlai sends comrade Stalin greetings from Mao Zedong and inquires about comrade Stalin's health.

Stalin thanks Zhou Enlai and inquires about Mao Zedong's health.

Zhou Enlai announces that Mao Zedong has been feeling well during the past two years. Speaks of the enormous amount of attention being focused in China on the upcoming [October 1952] XIX Congress of VKP(b) [All-Union Communist Party of bolsheviks].

Stalin notes that there has not been a convention for a long time, that in 1939 there were only 1.5 mln. party members, while now there are about 6 mln.; even though we have been holding down the influx of new party members, the party is still growing.

He asks about the delegation's trip. Zhou Enlai expresses thanks for the attention and answers that the trip went quite well and that the delegation travelled

in full comfort. In the name of Mao Zedong, [he] thanks comrade Stalin, the party CC [Central Committee] and the Soviet government for the enormous help in both the development of the national Chinese economy and in the struggle with its enemies.

Stalin. There is no need to thank. This is our duty. Wouldn't the Chinese comrades help us if we were in the same position?

Zhou Enlai agrees that this is true, adding that though assistance should be given, gratitude, obviously, should also be expressed.

Stalin. We must also thank the Chinese people for carrying on the right struggle. China also helps us by delivering us caoutchouc [natural rubber]. Thus, we will have to thank China as well.

Zhou Enlai says that, unfortunately, China's assistance to Soviet Union is insufficient.

Stalin. You came to power too late. You were late by more than 30 years.

Zhou Enlai asks for permission to set forth the reason for the delegation's visit. Refers to the telegram from Mao Zedong which contains the Chinese government's wishes. States three main topics to be discussed. First question the situation in the situation in Korea. Second - the internal situation within PRC over the past three years and the five year plan for economic development. Notes that a written report is under preparation. The Chinese delegation would like to deal with this question after the report has been presented. Third - the extension of the agreement on Port Arthur.

Stalin notes that the initiative to extend the joint use of the military naval base at Port Arthur must come from China. We are guests there, and guests don't ask such questions.

Zhou Enlai agrees with comrade Stalin and offers to exchange diplomatic notes. The Chinese government shall address the Soviet government with the necessary request.

The next question concerns the construction of the railway from Ulan-Bator to the Sino-Mongol border.

Stalin asks whether China is interested in such a railway.

Zhou Enlai notes that a railway to Xinjiang would be of greater importance. Xinjiang would be of greater importance. But that would be a complicated and difficult construction project. The Chinese government is intent on first building a railroad to Mongolia which could then connect to Soviet Union. The length of this railroad on Chinese territory would be approximately Chinese territory would be approximately 350 km. This railroad is projected to be completed by June 1955. Such a railroad serves Chinese interests as it opens a means of direct rail communication with Soviet Union and eases the receipt of industrial equipment from the USSR to China and the export of Chinese goods to Soviet Union.

Stalin responds that a railway to Xinjiang is very important in the long term, and that we could help China build this railway. But

this is indeed a long project. If the Chinese comrades are interested in building a railway across Mongolia, we are ready to help in its construction within Mongolian territory. This would be quicker. However, we believe that one cannot lose sight of a Xinjiang railway, since this would be a very important railway which would pass through regions rich in oil. There should be oil there. Mongolia doesn't have much of it.

Zhou Enlai notes that there are large deposits of iron ore in the Pinditsiuan region, and that it will become the center of the railroad and steel industries. Right now a plan for the construction of the Xinjiang railway is being drafted. In the course of the first five year plan a railway will be constructed from Lanzhou to Khami. In the second five-year plan a railroad will be built from Khami to the USSR border.

Stalin approves of this and reiterates the significance of a Xinjiang railway with respect to prospective oil mining.

Zhou Enlai affirms that there are oil deposits all along this route. Moves on to the agreement on hevea [rubber] trees.

Stalin indicates that the question has been pretty much decided.

Zhou Enlai agrees and shifts to the question of the five year plan for the PRC's economic development. Says that a written report on the subject is under preparation and that, as soon as the report is completed, he would like to visit comrade Stalin and personally go over the report with him.

Stalin agrees to this.

Zhou Enlai requests assistance for work in geological exploration.

Stalin promises such assistance.

Zhou Enlai shifts to the question of construction projects for various industrial enterprises in China. Says that there are 151 such enterprises planned to be constructed. Points out that China needs the Soviet Union's help in procuring equipment. Asks that the PRC's written request be considered and that an answer be given as to whether and in what capacity the Soviet Union would render such assistance, and that time periods be specified, and also that Soviet specialists be sent to China. Emphasizes that Soviet specialists working in China have performed a great deal of work and have been of great help to China, especially in the area of training work cadres and specialists.

Stalin. That is most important. China must have its own cadres in order to stand

strong on its own feet.

Zhou Enlai informs that they would like to receive an additional 800 specialists from Soviet Union.

Stalin says that this request will be examined and that we will try to send as many

as we can.

Zhou Enlai asks also for assistance with technical documentation (blueprints, etc.). Stalin answers that this is, indeed, nec

essary.

Zhou Enlai asks if it will be possible to continue to educate students in the USSR and to send interns to Soviet enterprises.

Stalin expresses agreement.

Zhou Enlai touches on the question of the military five year plan. Informs that materials are under preparation and that a written report will be presented. Also wishes to receive military equipment.

Stalin asks what Zhou Enlai has in mind: shipments of weapons or equipment for military factories.

Zhou Enlai says that he meant shipments of weapons. Noting that since agreement has already been expressed with regard to weapons for 60 divisions, he would like to discuss shipments for naval forces. Asks what sort of assistance could be received in the way of airplanes.

Stalin asks whether the Chinese government is thinking of building aero-manufacturing plants.

Zhou Enlai says that this would be very difficult to do in the course of the first five year plan, particularly with regard to jet airplanes. Notes that such construction is not planned to begin until at least 5 years from now, and motor-building - in 3 years.

Stalin points to the example of Czechoslovakia and Poland, which began with assembly plants. Says that the USSR could send China motors and other airplane parts, and China could organize the assembly of these airplanes. Cadres can be trained in this way. We went through the same process. Such a process would be more beneficial for Chinese comrades as well. First you must build 1-2 factories for motor assembly. We will send motors and other airplane parts which would then be assembled in China. That's how it was done in Poland, Czechoslovakia, and Hungary. This ought to be organized. Having organized assembly plants, you could then, in another 3 years, build an airplane factory. That is the easiest and the best way.

Zhou Enlai says that they are beginning to understand this and are organizing maintenance and assembly plants. He adds that if comrade Stalin finds it necessary to hasten the process, then they will take all appropriate measures to comply.

Stalin asks whether divisions of some sort have been organized in order to receive the shipment of weapons for 60 divisions which Soviet Union sent to China.

Zhou Enlai explains that out of the 10 divisions' worth of armaments that China has received, 3 have been given over to Korea and 7 have been earmarked for Chinese detachments in Korea.

Stalin asks if he understands correctly that all of the weapons will go to the Korean front.

lery pieces.

Zhou Enlai repeats his request for assistance with artillery. Emphasizes that for every Chinese shell fired, the Americans answer with 9 shells of their own.

Stalin. That's bad. Adds that if the Americans are firing 9 shells, the Chinese should be firing 20. We smothered the Germans with artillery. We had a gun stationed every 2 meters, while the Germans had a gun every kilometer. Artillery is important stuff. The Chinese government needs to get the munitions production going. We will help you build these factories.

Zhou Enlai points out that they are reorganizing existing factories and are planning new factories.

Stalin. That is necessary. Machine tools are of utmost importance here.

Zhou Enlai says that they have machine tools, but old ones.

Zhou Enlai explains that they are gradually becoming proficient with the new weapons, with 3-4 months of training.

Stalin. Under these circumstances we operate in a way so as to allow soldiers to become familiar with the weapons and the overall organization of the division. This takes time - approximately 6 months. Without it one could lose the weapons. Besides, during this time we inspect the operation of various mechanisms, and only then do we send these units to the front. Of course this preparation could be carried out behind the front, in Korea, for example. Half of the divisions receiving the new weapons should remain in China.

Zhou Enlai notes that the shipment of divisions to Korea results in losses, which must be made up.

Stalin emphasizes that it is imperative to train the divisions, so as to make them stronger.

ammunition in different plants: one plant makes shell casings while another loads them. It's difficult to do everything in one factory.

Zhou Enlai announces that the Chinese government will act upon the advice of the Soviet government regarding its aviation industry and take all measures to further its development.

Stalin emphasizes the importance of first organizing assembly plants.

Zhou Enlai says that the Chinese government plans to build tank-producing factories: one for light tanks with an output of 1 thousand tanks per year, and another for medium tanks, to be completed in 4-5 years.

Stalin advises to start here with assembly plans as well, pointing out that during the war we converted automobile factories to produce tanks. Says that it would be good for China to have 1-2 auto assembly plants.

Zhou Enlai raises the question of assistance with artillery.

observation and notes that the Chinese government is addressing this matter. They have maintenance factories and are currently working to organize assembly plants; these plants will open next year.

Stalin inquires whether China has worker education schools in their factories. Adds that we have such a school in every factory.

Zhou Enlai admits that this is one of the weaker spots. They are taking measures to rectify the situation. There are courses given in factories. They are trying to attract students and are selecting party members to teach.

Stalin points out that we have a special ministry, the Ministry of Labor Resources. There are vocational schools. It would be good for China to establish something of the sort. Every year these schools graduate around 1 mln. young workers.

Zhou Enlai asks, what sort of institutions does Soviet Union have to train middle management cadres[?]

Stalin explains that there are special technical schools for this purpose.

Zhou Enlai says that he would like to discuss the question of radar.

Stalin promises to assist in this matter. Radio and radar are very important.

Zhou Enlai says that they were thinking of building assembly plants for this purpose.

Stalin emphasizes that subsequently they should build radar equipment manufacturing plants.

Zhou Enlai says that so far they are not capable of producing radar equipment.

Stalin promises to help.

Zhou Enlai returns to the question of specialists. Says that the Chinese government does not intend merely to ask us for help with specialists but also plans to prepare its own specialists.

Stalin approves of this, pointing out that, in time, other countries will ask China for specialists: India, Burma, Indo-China. Adds that it would be wiser for the Chinese government to send engineers and technicians to Soviet factories, where they could hone their skills.

Zhou Enlai raises the question of defraying the costs that China bears from the trade imbalance between the two countries. Says that the Chinese government would like to ask for a new loan. However, observes Zhou Enlai, we understand that this

would be a burden for the Soviet Union.

Stalin points out that this is because we came to power earlier, that we were lucky. If the Chinese comrades had come to power before us, then we would have had to ask the same of them.

To this Zhou Enlai responds that Moscow is the center from which all nations derive inspiration for their struggle for liberation.

He goes on to give a short account of the situation in Korea. He points out that up until May 1951 the war in Korea was not static, but was a war of movement. Since May 1951, a front has been established, and the war has become static. Both sides are about equal in strength. The enemy is in no position to carry out an offensive. There is a certain equilibrium. But we are not carrying out large offensives, either. Like the enemy which has reinforced its position 15-20 km. deep, so have we created our own fortified zone, and continue to dig even now. The enemy has not been able to destroy our fortifications. The front line extends for about 200 km and is completely fortified, as are the left and right flanks.

Mao Zedong has put forth three questions. First will we be able to repulse the enemy? We are convinced that we will. Second - will we be able to hold our present positions? This year has shown that we will be able to hold and strengthen our positions. Third will we be able to carry out an offensive, to attack the enemy? Earlier we thought that we would hardly be able to carry out an offensive for more than 7 days. Now we are sufficiently strong to launch longer offensives and have entrenched ourselves well enough to withstand bombing raids.

Stalin asks whether they are capable of widening the scope of the offensives.

Zhou Enlai explains that they can launch offensives to capture isolated positions, but a general offensive would be difficult to carry out. Since the war acquired its static nature, the American command has been intent on drawing out the negotiations and is not interested in signing a truce.

Stalin says that apparently the Americans want to keep more Chinese POWs. That would explain their refusal to return POWs. Perhaps they turned them over to Jiang Jieshi. Perhaps they turned them over to Jiang Jieshi.

Zhou Enlai affirms that there are agents of Jiang Jieshi among the POWs.

Stalin observes that Americans want to decide the POW question on their own, in

defiance of all international laws. Under international law the warring sides are obligated to return all POWs, except those convicted of crimes. What does Mao Zedong think regarding this matter: will he give in or will he hold his own?

Zhou Enlai briefly relates the differences that separate them and the [North] Korean comrades in this matter. America has agreed to return 83 thousand POWs, and [North] Korea was ready to accept the offer. However, they have not considered the crafty game that America is playing here - out of the 83 thousand, only 6400 are Chinese, and the rest Koreans. In truth, they are supposed to return another 13,600 Chinese volunteers, but the Americans don't want to do this, though they are quite willing to return 76 thousand Koreans. This clearly shows that they are out to provoke us, by trying to drive a wedge between China and [North] Korea. Stalin asks how many Korean POWs are there.

Zhou Enlai answers - 96,600. Emphasizes that the question of the number of Chinese and Korean POWs supposed to be returned is a matter of principle. Informs that the Chinese government is firmly committed on having all 116 thous. POWs, including 20 thous. Chinese, returned. But if Americans were to agree on returning a few less, then we would not strongly object, if [they] promised that negotiations for the return of the other POWs will continue.

tion.

Stalin affirms that this is the right posi

Zhou Enlai informs that Mao Zedong, having analyzed the current situation regarding this matter, believes that one should stand firmly committed on the return of all POWS. The [North] Koreans believe that the continuation of the war is not advantageous because the daily losses are greater than the number of POWs whose return is being discussed. But ending the war would not be advantageous to the USA. Mao Zedong believes that the continuation of the war is advantageous to us, since it detracts USA from preparing for a new world war.

Stalin. Mao Zedong is right. This war is getting on America's nerves. The North Koreans have lost nothing, except for casualties that they suffered during the war. Americans understand that this war is not advantageous and they will have to end it, especially after it becomes clear that our troops will remain in China. Endurance and