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FOREIGN RELATIONS OF THE UNITED STATES 1964-1968 Volume XXX China DEPARTMENT OF STATE Washington, DC

250. Action Memorandum From the Assistant Secretary of State for East Asian and Pacific Affairs (Bundy) to Secretary of State Rusk/1/

Washington, March 29, 1967.

/1/Source: Department of State, ACA Files: Lot 72 D 175, U.S. Trade with Communist China, I. Secret. Drafted by Richard H. Donald and Frank O. McCord of ACA. The memorandum was sent by Bundy and his counterpart in the Bureau of Economic Affairs, but the source text does not indicate whether it was signed by Assistant Secretary Solomon or an Acting Assistant Secretary. The memorandum was sent through Katzenbach.

SUBJECT
A New Approach to Our Trade and Transaction Controls Against Communist China

Background:

1. On October 4 we advanced for your approval a memorandum recommending certain changes in our trade and transaction controls against Communist China. Briefly, these recommendations concerned changes in Foreign Assets Control and other regulations to provide for the rescission of special bunkering controls, to establish a general license for travel and related expenses of Americans travelling legally to Communist China, and to place under general license all tourist purchases of Chinese-type goods valued at $100.00 or less. These changes were directed not at China itself but at removing points of irritation in the enforcement of our regulations with third countries and with United States citizens. However, the changes were envisaged as a first step in a relaxation of our embargo on trade with China in the light of our exploration of possible ways to pierce mainland China's isolation. (Memorandum attached at Tab A)/2/

/2/The October 4 memorandum (Tab A) from Bundy and Solomon to Rusk, attached but not printed, bears a handwritten note from Katzenbach: "Bill--I think we should hold this awhile. NdK."

2. That memorandum has been held in abeyance at the request of the Under Secretary.

3. Changes in our foreign assets control regulations already approved by you and now under inter-departmental consideration would accomplish two things so far as China is concerned: (a) allow U.S. subsidiaries abroad, with certain exceptions, to engage in non-strategic trade with China, and (b) make FAC regulations inapplicable to U.S. dollar transactions between China and third parties. These proposed changes are designed to strengthen our relations with third countries by eliminating points of friction over extraterritorial application of FAC regulations. They will have practically no influence on our trade policy toward China.

4. Developments since October have added a note of urgency to the need for certain changes in our controls on trade with Communist China. We are therefore now submitting our original recommendation that imports and exports of foodstuffs be placed under general export-import license, and, separately, that medical supplies usable in combatting epidemics be placed under general license for export.

5. These recommendations are based on the following considerations:

a. The breakdown of order and authority in mainland China associated with the Cultural Revolution has brought with it the strong possibility that food supplies will be very short later in 1967, conceivably reaching famine proportions. The extreme concern of the Peking regime regarding the belated organization of spring planting argues for this possibility.

b. Meningitis has already reached epidemic proportions in China. The arrival of warm weather brings with it the threat of other diseases, endemic to China, reaching epidemic proportions. A copy of your letter to the Secretary of the Treasury (Tab B)/3/ proposes separately that pharmaceuticals and medical supplies be exempted from the applicability of the Foreign Assets Control regulations during this period of epidemics.

/3/A copy of the draft letter is attached but not printed.

c. In the American humanitarian tradition we are concerned with famine or disease, wherever they may exist. Neither U.S. public opinion, that of China, or that of the rest of the world should be presented with a picture of total U.S. indifference to prospect of famine in China. As the only country in the world pursuing a public national policy of an embargo on food to China, it would be hard to rebut charges of callousness and of lack of concern for and friendship with the people of China.

d. The effects of famine and disease cannot necessarily be contained within the borders of China, and we should prepare in advance to be free to take what measures may be appropriate and required in our interests and those of friendly nations.

6. Trade with China has been dealt with in recent discussions of our China policy. The China Advisory Panel, which met at the beginning of February, recommended easing controls, with some members believing that paving the way for limited trade now was the most promising way for giving credibility to the U.S. stance of hoping for long term reconciliation with the people of Communist China. The members of the Panel were all highly interested in your remarks at the concluding session on the possibility that food would represent a major lever in affecting the direction that China moves.

7. Although not a major subject of discussion, there was a unanimous view among the Chiefs of Mission at Baguio earlier this month that our trade controls should be relaxed, particularly those that would "have the effect of removing certain unnecessary irritations for Americans in their dealings involving China" such as the elimination of bunkering controls and removing requirements for certificates of origin on purchases in Hong Kong up to $100 in value of Chinese-type products.

8. On timing, the same two groups believed that while the Cultural Revolution was raging, no major policy initiatives towards China were advisable. At the same time both groups believed that the Cultural Revolution offered us the opportunity for further action in removing barriers on our side to eventual reconciliation. Relaxation of trade controls was specifically cited by both groups as falling within this latter category. The possibility of food shortages later this year adds urgency.

9. Changes in our regulations would not, we believe, lend material support through China to North Viet-Nam's war effort. Permitted exports include no "strategic" goods. China supplies rice to North Viet-Nam, but if cereals are sold to Communist China we do not envisage shipments of rice; 1967-68 world demand for U.S. rice already exceeds our capacity to meet it; and Peking's 1966-67 grain imports from Western sources are entirely wheat.

10. A general licensing of trade in items of artistic value is recommended on the two grounds that (1) this would contribute to reestablishment of some cultural interchange between the peoples of China and the United States, and (2) would eliminate a long-standing complaint against the U.S. Government lodged by museum curators across the country that FAC regulations deprive the United States of treasures whose value far outweighed any foreign exchange gain to Peking.

11. Fuller justification for our recommendations is contained in the original memorandum.

Recommendations:/4/

/4/The recommendations bear no indication of approval or disapproval, but see Document 280.

That you authorize E and EA to work out with Defense, Treasury, Commerce and Agriculture, as appropriate:

1. Changes in the special bunkering controls which would rescind those controls as applied to ships in the Chinese Communist and North Korean trade.

2. Changes in the Foreign Assets Control regulations to allow for general licensing for costs of trips to Communist China, North Korea, and North Viet-Nam for American citizens who hold passports validated for travel to those areas.

3. Changes in the Foreign Assets Control regulations to allow general licensing for Chinese-type goods up to the value of $100 per American tourist per trip abroad.

4. Changes in the Foreign Assets Control regulations to allow general licensing for art objects.

5. Procedures for placing food commodities under general license for import and export with Communist China.

These recommendations, if approved, would be put into effect at such time as you and the President direct.

 

251. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/

Washington, April 8, 1967.

/1/Source: Johnson Library, National Security File, Country File, China, Vol. IX. Secret.

SUBJECT
PL-480 Agreement with the Republic of China

Agriculture (Secretary Freeman) and AID (Administrator Gaud) request your authorization to negotiate a two-year, local currency agreement with the Republic of China (GRC) under PL-480 (Title I)./2/ We would sell the GRC cotton, tobacco and tallow (all in surplus supply) for $37.5 million. Half the proceeds will be for our use and will help meet increasing costs in Taiwan related to our Vietnam effort. The other half would go to the GRC as a grant to be used in expanding its Project Vanguard (technical assistance to increase food production) in 23 less developed countries, mostly in Africa.

/2/The memorandum from Freeman and Gaud to Johnson, undated, is attached but not printed.

State (Acting Secretary Katzenbach) and Budget (Director Schultze) both strongly endorse this proposal (see attached memos)./3/ I concur.

/3/Katzenbach's April 7 memorandum to Johnson and Schultze's April 8 memorandum are attached but not printed.

GRC help to other countries in boosting food output is highly useful in:

--impeding Peking's efforts to gain political and economic footholds in Africa;

--boosting GRC prestige and strengthening its position in the UN and with other nations;

--providing a good example of success for our own foreign aid programs by dramatizing Taiwan's progress;

--increasing Taiwan's involvement and interest in the rest of the world and thereby moving it away from preoccupation with the Mainland.

The proposal has clear benefits for us;

--helps the War on Hunger;

--helps our balance of payments through the use of local currency in Taiwan.

State and Agriculture have already taken soundings with Fulbright, Ellender, Morgan and Poage, none of whom raised any objection.

If you approve this proposal, Secretary Freeman will notify the two agriculture committees of the proposed agreement. It must then lie before them for 30 days before execution. We will also have to waive the statutory requirement that all foreign currency grants in non-excess currency countries be subject to appropriations.

We hope the 30-day waiting period will expire in time to announce the agreement when GRC Vice President Yen is in Washington (May 9-10).

Upon your approval, other key Congressional members will be consulted (leadership and Appropriations chairmen).

Walt

Authorization granted/4/
Denied
See me

/4/This option is checked on the source text.

 

252. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/

Washington, April 20, 1967, 8:10 p.m.

/1/Source: Johnson Library, National Security File, Agency File, United Nations, Vol. 7. Secret; Exdis. A handwritten "L" on the source text indicates that it was seen by the President.

Mr. President:

A North African herewith reports, in a quite credible way, on a visit to Communist China. We know so little about how they think that I thought you might like to read it.

Walt

Attachment/2/

/2/The attachment is a paraphrase of telegram 4921 from USUN, April 17, which reported a conversation with Simon Malley, a correspondent with the Tunisian-owned journal Jeune Afrique.

SUBJECT
Malley Visit to China

Malley freely spoke to Pedersen and Thacher yesterday for over an hour about his recent visit to Communist China and said he would be willing to answer further questions. Detailed report pouched Department (Sisco-IO, Bundy-Fe and S-Walsh). Highlights as follows:

The visit lasted 18 days. The highlight was a 2-1/2 hour discussion with Chou En-lai on March 28.

Chou and other leaders constantly spoke of U.S.-USSR collusion and spoke more about USSR than U.S. They traced collusion back to Khrushchev's 1958 refusal to reaffirm that an attack on China would be considered an attack on the USSR.

Chou thought U.S. would move to attack China when we were sure it would not affect the stability of the Soviet Government. U.S. action against China would involve Chinese reaction against all bases of attack, specifically mentioning Japan, Philippines, Laos, and Thailand.

Chou said he was considering the termination of Warsaw talks because they were being exploited by the USSR.

Malley thought the Chinese wanted to enter the Vietnamese War. Chou had reiterated China prepared to send volunteers to North Vietnam a day after North Vietnam requests them.

North Vietnam representative in Peking confirmed the offer and said North Vietnam (a) Did not want Chinese and (b) Would have to accept Eastern Europe volunteers if they took the Chinese with consequent political problems for themselves.

North Vietnam representative said, however, Chinese and North Vietnamese were then discussing, on contingency basis, terms and conditions under which volunteers would be accepted if a decision was made.

Chou said North Vietnam's proposal to talk to U.S. if we stopped bombing had been cleared with him by Pham Van Dong. Said he had warned him U.S. would then stiffen its position, and that Hanoi would be stuck with its offer. Said he had been right.

Chou identified Liu Shao Chi with Soviets from time of his assumption of office. Said Central Committee had voted against Liu on March 26, but Malley had the impression that legal quorum was not present.

Malley concluded that Mao Forces would clearly win and said Chou is confident of this also. Chou said the Government fully controlled 8 provinces. Army Chief of Staff admitted there had been revisionists in the army but denied any split.

In chance meeting with North Vietnamese Colonel Van Lau, who had gone to Burma to talk to U Thant, Van Lau heaped abuse on U Thant and said he had rejected U Thant's ceasefire idea in Burma. He expected U.S. to exploit Thant's proposal.

Van Lau said North Vietnam expected U.S. invasion for purposes of seizing and holding enclaves (which it could probably do) and for purpose of holding them to trade against withdrawal of North Vietnam's presence in South Vietnam.

Van Lau said North Vietnam had released an exchange between President Johnson and Ho Chi Minh because U.S. constantly was implying it in meaningful contact with Hanoi and they wished to make clear no meaningful discussion is going on.

Malley concluded Mao was deified in China to the extent that groups rallying around his name are certain to be successful. But thought he was far removed from day-to-day conduct of government. He also felt adulation attached to him could not be transferred to others and that if he died succession would be difficult question. He thought Chou En-lai had no power base and could be easily removed at will by those now holding the power.

Chou told Malley, in context Soviet untrustworthiness, that he had received a message from the Embassy in Cairo reporting Nasser's anger at finding Gromyko had come to Cairo to urge United Arabic Republic to go slowly in Saudi Arabia.

 

253. Memorandum From Alfred Jenkins of the National Security Council Staff to the President's Special Assistant (Rostow)/1/

Washington, April 21, 1967.

/1/Source: Johnson Library, National Security File, Country File, China, Vol. IX. Secret. Copies were sent to Jorden and Ropa. Rostow sent the memorandum to the President with a covering note dated May 1. A handwritten "L" on the source text indicates that the President saw the memorandum.

SUBJECT
Mao's Power and the Waiting Game

The costly game of power measurement continues in China with no clearly discernible and significant shift in power realities so far as pro-and anti-Mao elements are concerned. Recently exacerbated differences within the Maoist camp, however, may presage a further drop in Mao's fortunes. The most noteworthy fact in the top leadership struggle is that not a single person of prominence in the opposition has defected to the Maoists. The opposition is serving by standing remarkably firm and waiting long.

Almost three-fourths of the members of the Central Committee has come under serious attack during various phases of the Cultural Revolution. For all practical purposes the Party in the capital has become Mao and a small group of his subordinates.

The most significant change in the scene during the past month has been the rapid growth of power in the hands of the Army. The Army has not yet clearly indicated its support of either major faction. Mao's immediate coterie, however, clearly regards the Army as having contributed to the "adverse current" in the Cultural Revolution.

The vaunted "three way alliance" (Army, revolutionary rebels and good cadres) are an attempt to cover up the fact that the Army controls the country. The not very successful attempt ever since January 23 to use the Army against the opposition causes the Revolution to take on more of the aspect of an attempted military coup by a minority in the Party against the majority rather than of a manifestation of the revolutionary militancy of the masses in attacking the bourgeoisie, which is the way the regime has attempted to portray the Revolution.

Meanwhile the Army has its own problems. Two of its most powerful and respected old-timers are in disrepute. Hsu Hsiang-chien, Vice Chairman of the Military Affairs Committee and head of the Army's Cultural Revolution Committee, has apparently been relieved of both posts, and Yeh Chien-ying, also a member of the Military Affairs Committee, has been excoriated in a poster reporting that a recent meeting of the Committee broke up without deciding issues it meant to deal with. Even Madame Mao's perceptivity was equal to observing "the situation in the Army is hardly understandable."

There has been a recent upsurge of Red Guard sanctimonious hooliganism in Peking, along with reports of serious dissension within their ranks. Military control in Peking, however, is much tighter than when the Red Guards ran riot in January and there have been expressions of resentment that the Army's curbing of them is interfering with the Revolution.

Chou En-lai's prestige has again risen with reports that he heads a six-man "presidium" of the Communist Party. The role of this organization is not yet clear but it probably will be charged with continuing efforts to eliminate Chief of State Liu Shao-chi, Party Secretary Teng Hsiao-ping, and former Propaganda Chief Tao Chu. Lin Piao remains technically the heir apparent, but his chances are still not very apparent to me.

Barring a palace coup or sudden crumbling of the support of either faction, Mao's great struggle to retain power will primarily be determined by the manner and success of the Army's application of power and the performance of the economy, particularly in the agriculture realm. The former will be chiefly affected by a reading of Peking power realities and the reaction of the masses of Chinese citizens to the Army's exercise of power. The latter, of course, depends largely upon weather (so far better than average) and peasant-worker application, about which we simply know too little as yet. At the moment all we can say is that Mao's opposition has little cause to believe that they are losing by playing the waiting game.

Alfred Jenkins

 

254. Memorandum for the Record/1/

Washington, April 28, 1967.

/1/Source: Department of State, INR Historical Files, 303 Committee Files, 303 c.49, April 28, 1967. Secret; Eyes Only. Copies were sent to Kohler, Vance, and Helms. Prepared by Jessup on May 1.

SUBJECT
Minutes of the Meeting of the 303 Committee, 28 April 1967

PRESENT
Mr. Rostow, Mr. Thomas Hughes, Mr. Vance, and Mr. Helms

Mr. William Colby was present for Items 3 and 4

[Here follows discussion of unrelated subjects.]

3. Communist China--Covert Action Program

a. Mr. Colby presented the group with a briefing/2/ of the expectations and accomplishments of the covert action program against China. He made no claims of major successes but was able to indicate specific results and improvement in [less than 1 line of source text not declassified] broadcasts at a time when Chinese on the mainland were more open to alternatives than at any time in their recent history.

/2/A copy of a CIA memorandum to the 303 Committee, April 14, on the subject "Covert Action Program Against Communist China," is attached but not printed.

b. One instance was the statement by the Chinese musician defector which showed that one of a series of [less than 1 line of source text not declassified] broadcasts of which he was aware was actually believed by him and some of his circle to emanate from within China.

c. In this connection, Mr. Colby pointed to the requested approval of an enlargement of this thrust by the addition of [less than 1 line of source text not declassified] broadcasts [less than 1 line of source text not declassified] from a 50 kilowatt transmitter which would have the advantage of being independent of GRC and would reach a larger audience. This was expected to constitute less than $300,000 of the total $1,084,700 requested.

d. There was further discussion of coordinating themes and endeavouring to strike a suitable chord in such a fluid situation. The members approved the proposal in total although reserving some skepticism as to the measurability of its effect.

e. In answer to a question from Mr. Vance, Mr. Colby briefly summarized collection problems [2 lines of source text not declassified] since the last presentation on 12 November 1964.

[Here follows discussion of unrelated subjects.]

Peter Jessup

 

255. Editorial Note

An April 29, 1967, memorandum from Senate Majority Leader Mike Mansfield to President Johnson put forward several proposals pertaining to the Vietnam conflict. The first proposal, headed "An Approach Via China," argued that because U.S. bombing of North Vietnam would make it ever more heavily dependent on China, "The road to settlement with Hanoi, now, very likely runs by way of Peking rather than Moscow." Mansfield proposed making a "quiet and clearly conciliatory approach to China." He suggested that he might try to arrange a trip to Peking. He thought such a trip, to be effective, would need at least tacit Presidential approval and should be designed to get from Chou En-lai "the Chinese view of what is needed for a settlement in Viet Nam and for the restoration of more normal relations throughout the Western Pacific."

An April 30 memorandum from the President's Special Assistant Walt Rostow to Johnson stated that, after reading and considering Mansfield's proposals, Secretary of State Rusk was "strongly opposed" to a visit by Mansfield to Communist China, which would be "a major intervention in a troubled situation," would make the Soviet Union upset and suspicious, and would cause great confusion among "our friends in free Asia." Rusk believed, Rostow stated, "the proper way to proceed with respect to Communist China was to elevate the Warsaw talks to the Foreign Ministers level," but he was "hesitant to propose this until the situation within Communist China has somewhat settled down." Rostow noted that he was in general agreement with Rusk. (Filed with a covering memorandum of May 2 from Rostow to Johnson; Johnson Library, National Security File, Name File, Senator Mansfield)

 

256. Telegram From the Embassy in the Republic of China to the Department of State/1/

Taipei, May 2, 1967, 0445Z.

/1/Source: Department of State, Central Files, POL CHINAT-US. Confidential; Limdis. Repeated to Hong Kong and CINCPAC for POLAD.

3385. 1. Yesterday afternoon Gimo and Madame Chiang hosted large party in honor of US military, commemorating establishment of MAAG 16 years ago. This annual event was unusually large this year, with over 1,000 Americans invited.

2. Gimo asked me to arrive early so we could have half hour of private discussion just before party. Madame Chiang was present, also FonMin Wei and DCM Hummel. Fred Chien interpreted.

3. In somewhat emotional, and clearly sincere presentation,/2/ Gimo made the following points, directed at me as an old friend. Whether or not I wished to pass them on would, he said, be up to me.

/2/A memorandum of the conversation was sent with airgram A-740 from Taipei, dated May 3. (Ibid, POL 15-1 CHINAT)

4. (A) Gimo said USG has not always immediately understood the steadfastness and seriousness with which GRC views its responsibilities as ally of US. He stated his actions have always been based on moral principle, and will always be so based. Gimo repeatedly assured me that GRC will never do anything contrary to its commitments, or contrary to interest of US, which Gimo views as inseparable from interest of GRC.

5. (B) Gimo said he has often stated that the return to the mainland will be 70 percent political and 30 percent military. Up until recently GRC has had the view that the 30 percent of military action should precede political action, but now, Gimo explicitly stated, he intends to utilize political means first, after which at later time some military action may be necessary "to clean up the mess."

6. (C) Breakdown and fragmentation of authority on the mainland, and general disillusionment with communism, has created a situation where GRC political efforts can be successful, and will be welcomed, Gimo said. He intends to take seriously his responsibilities as an ally of the US to do what he can to assure the peace and security of the area, primarily through political means.

7. Comment: Because interview was terminated by Gimo immediately after his long presentation, in order to join reception, I had no opportunity to probe for explanation of what sort of political means GRC has in mind. However, I doubt that any major political demarche toward mainland is imminent and I take the Gimo's remarks to be intended primarily as a plea for greater trust and understanding on the part of USG, as well as an appeal for the US to refrain from taking any action that will damage GRC interests.

8. We have from time to time heard this sort of earnest appeal from Gimo before. A conversation I had with DefMin Chiang Ching-kuo on April 20 along similar lines (being reported by septel)/3/ was obviously intended to lay the groundwork for the Gimo's presentation. Neither the Gimo nor Chiang Ching-kuo gave any indication that their remarks were related to current problems surrounding preparations for visit to Washington of Vice President Yen. However, I am sure that these problems (particularly wording of joint statement) which were aired in GRC Cabinet meeting April 27, comprise one of the stimuli that have caused the Gimo's appeal.

/3/Reference is apparently to a conversation on April 28 with Chiang Ching-kuo, reported in telegram 3390 from Taipei, May 2. (Ibid., POL CHINAT-US)

9. Putting political action before military was clearly foreshadowed in Gimo's New Years Day message, and the Gimo undoubtedly considers his explicit statements to me (and Chiang Ching-kuo's also) as a major concession to US views as well as realistic response to current mainland situation.

McConaughy

 

257. Telegram From the President's Special Assistant (Rostow) to President Johnson in Texas/1/

Washington, May 5, 1967, 1223Z.

/1/Source: Johnson Library, National Security File, Country File, China, Vol. IX. Top Secret; Sensitive. Received at the LBJ Ranch at 8:30 a.m. A handwritten "L" on the source text indicates that President Johnson saw it.

CAP 67379. Herewith a summary of a major USIB appraisal of Communist China's military policy and non-nuclear forces.

I thought you would wish to read it over the weekend./2/

/2/The remainder of the telegram quotes in full the opening section of NIE 13-3-67, "Communist China's Military Policy and Its General Purpose and Air Defense Forces," May 3. A copy of the complete estimate is in the Central Intelligence Agency, NIE Files.

Communist China's military policy and its general purpose and air defense forces.

The problem.

To assess Communist China's general military policy and to estimate the strength and capabilities of the Chinese Communist general purpose and air defense forces through 1969.

Conclusions.

A. Whatever the outcome of the current political crisis, any Chinese leadership will probably continue to work towards a dominant position in Asia and great power status on the world scene. It will probably continue to be concerned by the danger of conflict with the US, and possibly with the USSR. Thus China will almost certainly continue to give high priority to improving its military capabilities.

B. Although the threat of force and its actual use beyond China's borders are significant elements in Peking's outlook, Chinese military strategy places primary emphasis on defense. With the possible exception of their nuclear/missile activities, we do not see in train the general programs, the development or deployment of forces, or the doctrinal discussions which would suggest a more forward strategy. At least for the short term, the high priority nuclear program is probably viewed by the Chinese as primarily for deterrence, though Peking's successes in this field bring substantial prestige and political influence, particularly in Asia.

C. In our view, Chinese forces are capable of providing a strong defense of the Mainland and launching significant offensive operations in neighboring areas. Thus far the political turmoil does not seem to have affected these Chinese capabilities or military production programs in any significant way.

D. Under a broad policy of modernization, Peking is pursuing the following programs and objectives:

1. The Army. Improvement of firepower, mainly by supplying new tanks and heavier artillery. The Army's organization and size has remained static: about 2.4 million men in 118 combat divisions of uneven quality and strength.

2. Air Defense. A growing inventory of fighters (MIG-19's), addition of better radars, and preparations for production of the SA-2, probably as part of a point defense system for key target areas. Production of the MIG-19 continues (20-25 a month) and production of the MIG-21 is expected.

3. The Navy. Five R-class submarines have been produced and about 10 more will probably be built by 1970. A construction program for guided missile patrol boats began in 1966 and is proceeding at an estimated rate of 10 per year. The South China Fleet is being strengthened by deployment of patrol and torpedo boats and by expansion of shipbuilding and shore installations in South China.

E. Nevertheless, the limitations and demands on China's economic and technological capacities are such that conventional forces will remain deficient in modern equipment at least into the early 1970's. There is little prospect for a significant increase in the mobility of Chinese ground forces; the air defense system will still be unable to cope with a major air attack; fighters will be at least a generation behind the US and USSR. Naval capabilities will still be mainly limited to offshore patrol and escort.

E. The current modernization programs for conventional forces plus even a modest effort to produce and deploy advanced weapons systems will, in our view, put pressures on an already strained economy. Thus China will face an increasingly difficult problem in allocating scarce economic resources between civilian and military needs and with the military sector. Resolution of these problems may be a cause of continued dispute, both within the military and at the top level of national decision-making.

 

258. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/

Washington, May 8, 1967, 7:10 p.m.

/1/Source: Johnson Library, National Security File, Country File, China, Vol. IX. Secret. Filed with a note dictated by the President: "Walt: Looks like I can't get there from here. See if I can't find some way to bring other people into it. LBJ/mjdr. May 19, 1967. 12:30 p.m."

Mr. President:

Herewith State's essentially negative response to the possibility of introducing more GRC personnel into South Viet Nam./2/

/2/Attached but not printed is an April 20 memorandum from Bundy to Rusk, with the subject heading: "Interest at Highest Levels in Expanding GRC Assistance to Viet-Nam."

On the economic side, the Vietnamese don't really want more Chinese around, although we are willing. On the military side, neither the Vietnamese nor our people want Chinese forces in South Viet Nam.

Behind all this is the basic negative attitude of the Vietnamese toward Chinese, heightened by the large relatively wealthy Chinese population in Saigon.

Walt

 

259. Memorandum of Conversation/1/

Washington, May 9, 1967, 12-12:55 p.m.

/1/Source: Department of State, Central Files, POL CHINAT-US. Secret; Exdis. Drafted by McConaughy on May 12. Approved in S on May 17 and in the White House by Jenkins on May 17. The meeting took place at the White House.

SUBJECT
Meeting of Chinese Vice President C.K. Yen with the President: Review of Events on Mainland China; Sino-Soviet Relations; Viet-Nam

PARTICIPANTS

Chinese
His Excellency Yen Chia-kan, Vice President/Prime Minister of Republic of China
Chow Shu-kai, Ambassador, Chinese Embassy
Li Kwoh-ting, Minister of Economic Affairs, Republic of China
Liu Chieh, Ambassador to the United Nations
Sampson C. Shen, Vice Minister of Foreign Affairs, Republic of China
Lai Chia-chiu, Director of the Information Department, Republic of China

Americans
The President
Secretary of State Dean Rusk
Walter P. McConaughy, Ambassador, American Embassy Taipei
James W. Symington, Chief of Protocol
William P. Bundy, Assistant Secretary for East Asian and Pacific Affairs

Vice President Yen delivered the warm greetings and good wishes of President Chiang to President Johnson and handed President Johnson a letter (attached) which President Chiang had entrusted to him for delivery./2/

/2/Vice President Yen visited Washington May 9-10. Records of his meetings with Secretary Rusk and Vice President Humphrey on May 10 are ibid., Visit Files: Lot 67 D 587, V-31. Briefing memoranda and other related material are ibid., V-30, and in the Johnson Library, National Security File, Country File, China, Visit of C.K. Yen.

A copy of President Chiang's letter is attached but not printed.

Vice President Yen opened the conversation by recalling the assurances which President Chiang had given to Ambassador McConaughy on May 1, to the effect that the GRC would always be faithful to its commitments and obligations to the United States as a close ally./3/ Vice President Yen mentioned his President's statement that his Government would never do anything which was inimical to U.S. interests and would continue to regard basic U.S. interests as being in line with the basic interests of his own Government. The Vice President said President Chiang hoped that the U.S. Government felt the same way.

/3/See Document 256.

The Vice President then turned to the situation on mainland China. He said it was the assessment of his Government that the conflict on the mainland would continue. There had been no physical liquidation by Mao of the opposition leaders so far, but this did not mean that the struggle was not intense. Mao had refrained from moving toward the full liquidation of his opponents only because he feared a widespread adverse reaction to such an extreme measure--a reaction which he could not control at this time.

The Vice President identified three stages in the cultural upheaval on the mainland as follows: (1) the public denunciation in Shanghai in 1965 of certain writings identified with Liu Shao-chi; (2) the development of the full fury of the Cultural Revolution, May-August 1966; (3) the emergence of the full-fledged open "power struggle," beginning in Shansi in January 1967.

The Vice President said the origins of the conflict go back seven years to about 1960 when the former Defense Minister, predecessor of Lin Piao, was liquidated. The Vice President thought that no one leader or faction is in effective control on the mainland now. Mao is now branding all of his opponents indiscriminately as "Revisionists." The word is being used very loosely without any precise meaning, other than that it means anti-Mao. Liu Shao-chi actually does not have a historical record of being pro-Soviet; nor does the Governor and military commander of Sinkiang Province, Wang En-mao, have a pro-Soviet record either. Wang helped to defeat the Soviet effort some years ago to set up an "East Turk-estan Autonomous Republic."

The tactic of Mao is to vilify his opponents in every way he can. The revolution has become something distasteful to almost everybody except the pro-Mao group and Mao seems to take satisfaction in openly characterizing his revolution as something which is violent and something to be feared. He openly uses the Chinese phrase "tsao fan" (to make rebellion) in describing his own movement. The Vice President estimates the opposition to Mao is still very strong. Liu and other elements still have a considerable following and this limits Mao's freedom of action. The Vice President's conclusion is that the fight will go on. Mao cannot quell the dissenters, not all of whom are pro-Liu. There is a large anti-Mao group of Communists who now have something in common with the majority of the people, who are not identified with the Communist Party but who have been fairly neutral so far. As the economic situation deteriorates further, the continuing struggle will produce a steady growth in anti-Communist sentiment.

The Vice President said the GRC considered that the efforts against the Chinese Communists should be "70 per cent political" and only 30 per cent military. The GRC has "many agents" working on the mainland. The tactics being used by the agents are different from what they were before 1959. They are now instructed to mingle openly with the people, posing as fanatical pro-Communists. Some pretend that they are pro-Mao, and some pro-Liu. They are trying to broaden and deepen the conflict. The GRC predicts that the turmoil will lead to disastrous results, especially as to production of basic food requirements. It is believed that spring planting is down at least 11 per cent. The grain loss will be seriously felt in the fall. With the further deterioration of the food situation, the GRC believes that anti-Communist sentiment will grow and the discontent will lead to an expansion of the fighting.

Answering a question of Secretary Rusk's about Chou En-lai, the Vice President doubted that Chou could ever become a "third force" in the Communist hierarchy. He was well-known to many GRC leaders, and he was clearly identified as a man who always tried to side with the winner. He had once been close to Teng Hsiao-ping, the No. 2 man in the Liu group. Then he had wavered when he thought the Liu group was losing ground and had gone over to the Mao side. He had then tried to exercise a mediating influence between the Red Guards and the Communist Party elements. He had then been subjected to some censure. He did not have the strength to emerge as a third force. Yen thought Chou would be used by Mao as long as the struggle continued, and that he would lose favor with Mao after the eventual purge of Liu. He would have a place of some importance during the struggle.

Yen thought that the regime and the entire country were in a state of confusion. The regime was not capable of effective control. Both the Army and the Party were split and disorganized. How can a regime which cannot control Army or Party control the country? There was a probability of further dissension and eventual purges. In this situation the chances for a reunified China under a different leadership were greater than ever before. In this connection, Vice President Yen said, "We have our aspirations."

The Vice President referred to the urgent efforts of the ChiComs to develop nuclear weapons. He thought that the GRC information on ChiCom nuclear weapons progress tallied closely with U.S. information. He mentioned our close consultation and effective exchange of information on this subject. Yen thought that the ChiComs had hoped to have their sixth nuclear test on the Red Holiday, May 1. They had missed this date, but Yen thought the next explosion would come soon.

Yen spoke of the feverish preparations of the Communists for war. Despite the economic failures and the poverty of the people, a population of 700 million has a high productive capacity. By ruthlessly lowering the living standard of the people still further, the Communists can accumulate large resources for production of nuclear weapons. Even though the regime had immense troubles, these troubles themselves make the regime more aggressive and not less so.

Yen thought that Sino-Soviet relations would not change essentially. The rift between the Soviets and the Mao faction is getting worse, but some sort of agreement apparently has been reached permitting the freer transit of Soviet war material overland to North Viet-Nam. Yen thought that the agreement was only "technical" and did not signify any real improvement of relations. It was a renewal of a 1965 transit agreement.

Secretary Rusk said there were some reports that the transit agreement provided for the delivery of the arms supplies to North Vietnamese personnel at the Sino-Soviet border.

Assistant Secretary Bundy said he agreed with Yen and noted that he did not believe that the Soviet transit traffic across China to North Viet-Nam had ever been significantly interfered with.

In response to a query as to the relative influence of the ChiComs and the Soviets in North Viet-Nam, Yen said he thought the Chinese Communists have more influence and are pulling most of the strings. The Chinese Communists have the advantage of proximity and can control the land supply route. They can give a green light or a red light. The sea route of supply is difficult at best and places the Soviets under a handicap. Yen thought that the Liberation Front in South Viet-Nam did not listen entirely to Ho Chi-minh's orders. The Liberation Front were mostly trained in Communist China and they are responsive to Chinese Communist direction. This gives the Chinese Communists as much influence over the Viet Cong as anyone. In other remarks Yen also suggested that Peking had some control over Hanoi.

Yen thought that the number of Chinese Communist personnel in North Viet-Nam might run as high as 60,000 to 80,000, although he could not be sure. The Chinese Communist disposition of personnel in North Viet-Nam is ostensibly for defense of the Chinese border, but the ChiCom elements in North Viet-Nam watch Hanoi very closely.

Yen said that the Generalissimo points out that the "root of the evil" is on the mainland. Of 10 Chinese Communist Army Field Marshals, one, Marshal Lo, has been purged. All the others, except Lin Piao, have been censured. 16 Communist deputy prime ministers had been disgraced in one form or another. At the provincial level, thousands and thousands of officials have been removed. There is dissension on a big scale. An immense effort is being made against Mao, and Mao is heavily burdened by external problems as well as his major internal challenge. President Chiang is convinced of the necessity for the allies to think ahead and plan for the long pull as well as the immediate crises. The Generalissimo believes we should think in terms of 20 to 30 years.

In response to a query from the President as to the GRC view of the likely course of the war in Viet-Nam, Vice President Yen noted that the United States and allied forces in Viet-Nam are far superior. But control of much of the countryside by the enemy poses a difficult problem which must be dealt with by political as well as military means. Pacification is a difficult task but is an indispensable part of the over-all effort to counter the Liberation Front. Rural development work is of prime importance. Communist control of "the surface" between the urban centers gives the Communists a big advantage. The Vice President said his Government considers that the emphasis which the United States, since the Honolulu Conference, has accorded to pacification and effective civil government is correct. The Vice President mentioned the technical assistance which the GRC is contributing in Viet-Nam, which he termed of modest proportions.

In response to another question from the President, Vice President Yen said that his Government held the view that the Soviet Union would not come to the assistance of the Chinese Communists in any foreseeable international situation, and he thought they would not directly intervene in the Chinese Communist internal struggle, although they were naturally hoping for the downfall of Mao.

In response to a question from Secretary Rusk as to what outcome of the struggle in Communist China would be best from the standpoint of U.S. interests, the Vice President said he thought the conflict would go on for a long time in any event, and that a victory by either side could not be beneficial in any way. He felt that a victorious Liu Shao-chi might in the long run pose an even greater threat than Mao to the Free World, despite Mao's violent and ruthless extremism. Liu has never actually been pro-Soviet, but he could be forced into a pro-Soviet position. A united front of the two large Communist powers which would then emerge would be the greatest threat to the Free World.

Vice President Yen thought that a continuation of the present factional struggle on the mainland would be the best situation from the standpoint of Free World interests. He thought that continued conflict would encourage the now submerged anti-Communist elements. The Vice President thought that the ordinary man on the mainland is not interested in ideologies. The ordinary Chinese will not like the sufferings that will come from economic failure. The people of the mainland will see the great contrast between the breakdown on the mainland and the success of the Republic of China on Taiwan. Hence, they will become more and more anti-Communist. "This is what we are aspiring for," the Vice President said.

Responding to a question from the President as to whether the mainland turmoil would probably tend to bring the Chinese Communists more directly into the Vietnamese war or keep them out, the Vice President said the Chinese Communist policy would be to keep the trouble going in Viet-Nam on more or less its present scale. He thought that they would try to maintain indefinitely about the present degree of U.S. involvement.

In answer to a further question from the President as to the circumstances under which the Chinese Communists might be tempted to intervene openly in Viet-Nam as they did in Korea, the Vice President thought that the Chinese Communists would deliberately avoid the sort of direct involvement which they chose in Korea. He thought they would try to "fight by proxy," avoiding a direct Sino-U.S. confrontation, and at the same time preventing the North Vietnamese from making a settlement of the war. The Vice President thought that the Chinese Communists would use all necessary means to "sabotage" any peace talks.

Speaking to another question from the President as to what sort of solution might be envisaged in such circumstances, Vice President Yen felt that a solution could come about only through the end of Communist control of mainland China, and he thought this would eventually happen. The President interjected parenthetically that he didn't see how this was to be done.

Vice President Yen said that President Chiang had instructed him to reiterate that his Government wishes to maintain close contact and frequent consultation with the United States Government. The Vice President repeated his opening remarks, saying that the Republic of China considered the interests of the two countries should be identical. "We will do nothing contrary to United States interests and we hope the United States will do nothing contrary to ours." The Vice President pointed out that the unpredictability of the mainland situation made alertness and close consultation all the more essential, adding "We will be building the Republic of China more and more."

The Vice President noted that the outbreak of a Cultural Revolution on the mainland would have been unthinkable 10 years ago. Liu's No. 2 position in the secession then seemed clear. The emergence of the Red Guards could not have been imagined.

The Vice President noted that currently the 4th Field Army in Kwangtung Province has shown some pro-Liu tendencies, and Lin Piao has been compelled to move some other army units into that area. The loyalty to Mao of many units in the Communist Army is doubtful. In Fukien Province, Mao has removed General Yeh Fei, an active political commissar. These are examples of widespread current troubles facing the Communists.

The Vice President predicted that the situation will gradually change in the Free World's favor. At the same time he cautioned that there is no room for complacency and his Government clearly understands the necessity to work hard to accelerate and intensify the changes which are causing such trouble to the Communist regime.

At this point it was time for the White House luncheon, and the meeting was terminated with the thanks of the President for the helpful presentation by the Vice President of the views of his Government on these questions.

[Continue with Document 260]

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