Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972

49. Memorandum From Secretary of State Rogers to President Nixon¹

Washington, December 2, 1969.

SUBJECT

• Next Moves in China Policy

I believe the time has come to proceed with the remaining measures relaxing economic controls against Communist China, which you approved in principle in June (NSDM–17),² as well as to consider other steps we might take toward China.

• —Talks between the Soviet Union and Communist China begin in Peking on October 20. We do not believe that these will result in a fundamental change in the Sino-Soviet relationship. The roots of the ideological dispute will remain, together with a certain level of tension. Although the Sino-Soviet discussions have apparently not gone well thus far, we cannot exclude the possibility of at least a partial rapprochement between the Soviets and the Chinese, which might take the form of some restoration of normalcy in state-to-state relations.
• —Our moves may introduce an additional complicating factor into the Soviet leadership’s assessment of our intentions towards China— and towards the USSR, as well. Such an effect would also serve our long-term interest of forestalling an eventual more fundamental rapprochement between the USSR and China.
• —At the same time, this conjunction of Soviet agreement to negotiations both with China and with us, on SALT, enables us to maintain our posture of non-involvement in the Sino-Soviet dispute. Moves by us at this time in the direction of opening the door towards China a little more can hardly be the object of plausible objections by the Soviet Government when it itself is talking with the Chinese.
• —Notwithstanding the ups and downs in Chinese propaganda stridency in recent months, there have been signs of moderation in Peking’s foreign policy stance including—in private encounters—toward the U.S. We cannot predict that such steps as I propose would evoke a favorable response from Peking, but the chance that they might now appears to be greater than it has been for some time. Additionally, when the Chinese leadership appears to be in some disarray, we may contribute to a strengthening of those who advocate moderation and thereby continue to move towards a position where we may be able eventually to exert some influence on the Chinese Government in a direction more favorable to our own interests.
• —Finally, the steps I propose would serve specific U.S. interests. They would also be useful preliminaries to an attempt by us in the near future to revive bilateral discussions with the Chinese and as further signals that we are interested in continuing to move towards more normal relations.

The Republic of China will object to such moves, but I do not believe this should deter us. These actions would not affect any vital security interest of Taiwan or diminish in any way our existing treaty commitments. They would be consistent with what I have told ROC leaders about our general approach towards Communist China.

If you agree that we should move forward, I would contemplate undertaking the requisite Congressional consultation, preparatory to announcement of changes in regulations.

Treasury concurs that all the actions described below can be taken by executive action and approves of the recommendations.

Specific Recommendations³

I have considered the whole range of measures we might take—economic, travel, raising the level of the Warsaw talks, etc.—but at this time recommend the following moves to be implemented in two stages.

a. For implementation immediately:

1. Remove Foreign Asset Control (FAC) restraints on foreign subsidiaries of United States firms on transactions with China regarded as non-strategic by COCOM (approved by you in principle in NSDM–17, June 26, 1969);

2. Eliminate the present restrictions on U.S. business participation in third-country trade in presumptive Chinese goods;

3. Modify slightly your approval in June allowing the noncommercial purchase of Chinese Communist goods by Americans travelling or resident abroad by removing the $100 ceiling and the requirements that non-commercial imports from China enter the United States as accompanied baggage.

In addition to their political effects on the Chinese and Russians, implementation of these measures would:

• —remove a substantial licensing burden on Foreign Assets Control and the general public;
• —relieve a number of difficult problems which our Allies have raised pertaining to United States extraterritorial controls on the activities of American subsidiaries abroad;
• —not make any commodities available which the Chinese cannot already purchase abroad;
• —contribute to the competitive strength of American business concerns overseas and respond to strong pressures from foreign branches of U.S. business concerns in several Asian countries to be allowed to compete for third-country business in goods administratively assumed to be of Chinese origin; and
• —satisfy the desire of tourists, collectors, museums, and universities to import Chinese products for their own account and rid us of administrative headaches.

b. For implementation following the resumption of our bilateral Ambassadorial talks with the Chinese:

1. Modify the Department of Commerce export control regulations through a general license for the export of food, agricultural equipment, fertilizers and pharmaceuticals (approved by you in principle in NSDM–17, June 26, 1969). This would

• —provide an initial opening in the area of non-strategic direct U.S. trade with Peking;
• —would not enable Peking to obtain commodities they are not already able to purchase elsewhere;
• —would represent only a modest extension beyond the offers to sell grain and pharmaceuticals on an ad hoc basis to the Chinese made during the Kennedy and Johnson administrations; and
• —would open up a potential outlet for American farm products (for example, the Chinese Communists have recently expressed interest in purchasing U.S.-produced oilseeds from a large West Coast vegetable oil company through a Hong Kong intermediary).⁴

WPR

1. Source: National Archives, RG 59, Central Files 1967–69, POL CHICOM–US. Secret; Sensitive; Nodis. Kreisberg drafted the memorandum on October 6 and sent it under Green’s signature to Richardson. On October 23 Winthrop Brown and Morton Abramowitz asked for a shorter, “punchier” version. (Ibid.) In a November 22 memorandum to Rogers, Richardson wrote: “it is very important to move on the attached package right away.” He hoped that the measures could be carried out by the end of the year. Richardson emphasized that “Sino-Soviet border talks are still going on. It might prove difficult to move ahead with these measures if the talks break down.” He also wanted the measures implemented prior to Chiang Ching-Kuo’s visit in 1970 and pointed out that “Congress will be moving out for its Christmas recess and our consultation problems will be much reduced.” (Ibid.) Green revised the memorandum and forwarded it to Rogers on December 1. He attached a covering memorandum, in which he noted that the memorandum to Nixon had been changed to reflect Rogers’ request to delineate more clearly between actions that could be taken immediately and actions that would wait for the resumption of Sino-American talks in Warsaw. (Ibid.)
2. Document 14.
3. There is no indication of approval or disapproval of the recommendations, but the NSC staff summarized this document in a 1-page memorandum, which Kissinger initialed and sent to Nixon on December 11. The President initialed his approval of all recommendations and added a handwritten note: “Depending on Warsaw meeting analysis.” An unknown person added the notation “12–15/69.” A handwritten notation beside Kissinger’s signature reads: “Al—Let’s move on this. I’ll call Richardson.” (Memorandum from Kissinger to Nixon, December 11; National Archives, Nixon Presidential Materials, NSC Files, Box 519, Country Files, Far East, China, Vol. III) On December 15 Kissinger called Richardson at 11:50 a.m. to tell him that the President had approved “that proposal on China policy: foreign assistance control; restrictions on US participation in trade and modification of non-commercial purchases. Now how do we implement it?” Richardson answered that it would be done by an announcement in the Federal Register. Kissinger asked if could be done by early next week. (Library of Congress, Manuscript Division, Kissinger Papers, Box 360, Telephone Conversations, Chronological File) On December 16 Kissinger sent a memorandum to Richardson entitled: “Next Move in China Policy.” It reads in full: “The President has approved the ‘recommendations for immediate implementation’ contained on page 3 of the Secretary of State’s memorandum of December 2, 1969, subject: Next Moves in Our China Policy. Implementation of these three steps should be initiated in a low-key manner so as to minimize public speculation on the implication of these moves.” (National Archives, RG 59, Central Files 1967–69, POL CHICOM–US) On December 18 Kissinger and Richardson met to discuss the implementation and public announcement of this policy. In particular Kissinger wanted to review how other nations and members of Congress would be notified. (Memorandum from Haig to Kissinger, December 18; ibid., Nixon Presidential Materials, NSC Files, Box 337, Subject Files, HAK/Richardson Meetings, May 1969–December 1969)
4. Relevant diplomatic posts were informed of the new regulations in telegram 209491 to Taipei, Ottawa, Tokyo, Seoul, Saigon, Canberra, London, Wellington, and Hong Kong, December 18. (Ibid., RG 59, Central Files 1967–69, STR 9–1 CHICOM) A Department of State spokesman announced the changes on December 19. (Department of State Bulletin, January 12, 1970, p. 31) The actual modifications to the Foreign Assets Control Regulations are in 34 Federal Register 20189.