Foreign Relations of the United States, 1952–1954, China and Japan, Volume XIV, Part 1

PPS files, lot 65 D 101, “China”

No. 365
Report by the Secretary of State to the National Security Council¹

top secret

[Washington,] October 28, 1954.

Our policies in relation to China (ChiNats and ChiComs) need now to be brought into harmony with our basic overall policies. At present they include certain elements which are obsolete.

Our basic policy is to be clear and strong in our resolve to defend vital United States interests, but not to be provocative of war. We want peace so long as this does not involve the sacrifice of our vital interests or fundamental moral principles.

In application of the above policy in the Far East:

I. We have negotiated since 1951 a series of mutual security treaties covering Japan, South Korea, the Philippines, Southeast Asia, Australia, and New Zealand. We have assumed virtual sovereignty over the Ryukyus in exercise of our rights under the Japanese Peace Treaty, and we have instructed the Seventh Fleet to protect Formosa.

These various measures in aggregate substantially cover the free world positions, in the Western Pacific and East Asia, except Indonesia which is neutralist. Keeping these areas out of Communist control is essential to the maintenance of the Pacific Ocean as a friendly body of water with our defenses far from and not close to the continental United States.

II. We brought to an end the fighting in Korea against the ChiComs and the North Koreans when we could do so consistently with the maintenance of the principles which had brought us into that war and when to prolong the fighting would probably have led to general war with Communist China—and perhaps Russia. Now it is our policy to prevent Rhee from renewing the war.

III. The Executive was ready to recommend to the nation that we intervene in the Indochina fighting on condition that the object would be independence and not colonialism, and if the action would be united action, including those most directly concerned in the area. When these conditions were not obtainable, we acquiesced perforce in the Indochina armistice and we stated that we would not seek, by force, to violate that armistice. We are, however, seeking to limit the ill results of the armistice as they may affect us, notably by the Manila Pact.

IV. With relation to China, we have the following policies:

1. Continuing diplomatic recognition of the National Government as the Government of China.

2. Direct support of the ChiNat military establishment and their economy through large scale aid programs.

3. Non-recognition of the Chinese Communist regime but dealing with it on a de facto basis when circumstances make this useful.

4. Opposition to seating the ChiComs in the Security Council, the General Assembly, and other organs of the United Nations.

5. Maintenance of a trade embargo against the ChiComs.

6. Dependence on Executive Order for defense of Formosa and the Pescadores by United States Armed Forces.

7. Encouragement of ChiNats’ harassing operations by sea and air against Communist shipping and certain mainland targets of opportunity. (This policy is partially and provisionally in suspense.)

8. Leaving the fate of the Nationalist held offshore islands (Quemoy, Tachen, etc.) to be determined by fighting between the ChiComs and the ChiNats with United States support to the ChiNats limited to matériel support.

The above policies originated at about the time of the outbreak of the war in Korea, they continued while fighting was active in Indochina. In part they represented the then need for diversionary threats. The order to the Seventh Fleet presumed possession by the President of “war powers”.

Present conditions do not call for any basic change in the first five of the above-mentioned policies. However, now that the Korea and Indochina fighting has been brought to a close, some of the above policies require adjustment to bring them into harmony with our basic policies and our constitutional procedure.

1. There should be negotiated a mutual security treaty with the ChiNats covering Formosa and the Pescadores, but not the offshore islands. In this connection it may be noted that Japan never ceded sovereignty over Formosa and the Pescadores to China. Japan renounced its own sovereignty but left the future title undefined. Thus the United States as principal victor of Japan has an unsatisfied interest in these former Japanese islands. This treaty, when made and ratified, will replace the Seventh Fleet Presidential order which is becoming of questionable validity from a constitutional standpoint.

2. The treaty should be defensive in nature and this aspect should be accepted by the ChiNats. It would not be consistent with our basic policy of non-provocation of war were the United States to commit itself to the defense of Formosa, thus making it a “privileged sanctuary”, while it was used, directly or indirectly, for offensive operations against the ChiComs.

The policy should be the same as in relation to Germany where Adenauer has renounced the use of force to unite Germany, and in relation to Korea where we oppose the use by Rhee of force to unite Korea. This does not exclude taking advantage of opportunities by joint agreement, as for example, if there were large scale insurrections against the Chinese Communist leadership or if their regime collapsed.

3. The United Nations Security Council should be seized with the problem of the fighting, actual and potential, involving the ChiNat held offshore islands with a view to that Council’s taking provisional measures to stop the fighting as necessary to prevent the aggravation of a threat to international peace and security. This would, broadly speaking, restore the situation to that which has in the main existed over the last five years. The ultimate disposition of these islands would have to be peacefully resolved at some future date not now predictable. If Security Council action were accepted by the ChiNats but vetoed or otherwise blocked by the Communist side, then the United States might feel justified in agreeing to the use of Formosa as a base from which the Nationalists could aid in the defense of the offshore islands, were they seriously attacked by the ChiComs.

4. So long as the ChiComs are engaged in building up a war establishment and are motivated by a hostility to the United States which is, on the surface, more virulent than that of Soviet Russia, it is important to maintain stringent controls on strategic materials for China. It is true that to the extent that the China embargo is more severe than that on the Soviet bloc, there can be importations via the Soviet Union. However, at the moment transportation facilities limit this possibility.

The reaction of the ChiComs to United Nations Security Council action will probably have a bearing on the degree to which it is possible to get other countries to maintain an embargo list like the present one. Recalcitrant action would make it easier; acceptance of United Nations authority would make it harder, to maintain the list. Already considerable pressures to reduce the list are building up. Perhaps some minor adjustments are inevitable in order to maintain the essentials. We should, however, exert our influence in favor of restricting China trade in goods which would have a strategic use in China.

1. The source text is not signed and bears no indication of the drafter; a handwritten note on it indicates that it was distributed by the Secretary at the Oct. 28 NSC meeting.