The Director of the Office of Far Eastern Affairs ( Vincent ) to the Secretary of State

Mr. Secretary: The following review of China policy, based on renewed thought we have been giving the matter over the past month, is submitted in compliance with your recent instruction to me.

We have two controlling statements in regard to China; that issued by the President on December 18, 194610 and that issued by you on January 7.11 The President’s statement of December 15, 194512 and the statement on China issued by the three Secretaries on December 27, 1945 at the conclusion of the Moscow Conference13 also continue to be applicable.

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It is our policy to assist the Chinese in achieving unity by the democratic method of consultation and agreement. It is also our policy to give the Chinese economic and other aid unrelated to civil strife “when conditions in China improve” and when there is reasonable assurance that such aid will encourage economic reconstruction and reform in China and, in so doing, will promote a general revival of commercial relations between American and Chinese businessmen.

We pursue these policies with a clear, practical purpose in mind. We are not engaged in philanthropic or “missionary” activity motivated by sentiment or sympathy for the Chinese. We desire a unified, democratically inclined China because we think that such a China would contribute towards peace and progress in the Far East. We do not think that a Communist China could make such a contribution any more than we think that a feudal-fascist China could do so. Without sacrificing any legitimate national interest, it is our purpose to prevent China from becoming a major irritant in our international relations, particularly with the U. S. S. R. These statements are made to stress the fact that a unified China is, from our point of view, a means toward an end rather than an end in itself. In short, we are following policies in China to achieve a larger objective.

Recent developments require that we review, and possibly revise, our tactics, not our strategy. There are certain specific decisions which must be reached but they should be reached after an over-all consideration of the problem. The following are some of the specific and general questions that face us: legislation to establish the Military Advisory Group at Nanking; transfer of 159 merchant ships to China14 on credit; completion of the 8⅓ group program for the Chinese air force; transfer, by sale or otherwise, of arms and ammunition to the Chinese; extension of credit by the Export-Import Bank15 for economic projects in China.

Consideration of these questions calls for a very careful estimate of the situation as it may develop in China during this year. Such an estimate is hard to make. We have guide posts as to what the Chinese should do. We cannot say with assurance what they will do.

In approaching the problem of economic assistance it will be up to us to determine “when”, in the words of the President, “conditions in China improve”. You have stated clearly the need for an “assumption of leadership by the liberals in the government and in the minority parties”. You have pointed out the necessity of giving substance to the form, as exemplified in the new Constitution, by a genuine welcome of all groups actively to share in the responsibility [Page 791] of the government and have said that the first step will be the reorganization of the State Council and the executive branch of the government to include liberals and non-Kuomintang members. You have stated specifically that the Kuomintang should cease to receive financial support from the government if the termination of one-party rule is to be a reality. These statements indicate in what manner conditions in China should improve.

In judging the steps which the Chinese Government may take to meet the conditions stated by you, it is believed that sincerity of purpose should be given greater weight than the actual length of the steps taken. While being careful not to be misled by measures adopted by the Chinese as “window dressing”, we should not set such a high mark for early progress as to defeat our own ends. Thus, in determining when China merits economic assistance in carrying out approved projects, our approach should be more sympathetic than exacting or censorious. The character of the projects themselves may in large measure determine our attitude. They should not be related to civil strife and should be carefully examined to determine whether they will be made ineffectual by waste, or corrupt management on the part of Chinese officials seeking personal financial gain. Projects calculated to restore transportation, improve agricultural conditions and stimulate exports, and in general to promote a revival of Chinese-American business activity should receive a priority consideration over straight industrial schemes or long-term reconstruction ventures.

What we do with regard to arms and ammunition for China will depend largely on our estimate of coming events. It would be manifestly unrealistic to withhold arms from National Government forces if such action condemned them to a degree of military anemia which would make possible a successful offensive by the Communist forces. However, it is not believed that our withholding arms will result in such an eventuality in the coming months. It might result in the immobilization of some of the National Army’s modern American equipment, but it is believed that Chiang16 has, and can get from sources within the country, a sufficient amount of small arms and ammunition to enable him to withstand a general Communist offensive in the unlikely event that one is undertaken. This situation will take the most careful day to day watching.

In any consideration of the question of American military aid to China, we should not overlook the problem of Chinese reaction in groups other than the right-wing Kuomintang and the Chinese [Page 792] Communists. Partly because of Communist propaganda and partly through their own convictions, a sizable body of Chinese public opinion has been strongly critical of American military aid to the National Government. Existing anti-American feeling could easily be fanned by propaganda against American military supply assistance to the National Government.

It is believed that, in the last analysis, the United States would be unwilling to give the amount of military equipment and support necessary to enable the Chinese Government to destroy or reduce to negligible proportions the Chinese Communist Party and armies. Limited amounts of munitions of war might then serve only to encourage the Kuomintang military leaders to wage an inconclusive war which might cause the collapse of the National Government for economic reasons.

If we let down the bars now to munitions shipments to China, it would be very difficult to control the flow not only from the United States but also from other countries. Those reactionaries in the Chinese Government who have been counting on substantial American support regardless of their actions might have good cause to conclude that they were right. Premature action on any proposal for military aid to China might serve to weaken the effect of your statement and thus prevent any chance of genuine reform in the government, which is the only practical method of combatting the challenge of the Communists.

In the absence of evidence that the civil war may soon cease, it would be preferable from our standpoint to let the opposing Chinese military forces reach some kind of solution or equilibrium without outside interference. Should, of course, we find evidence of material support for the Chinese Communist armies from the Soviet Union, an immediate reassessment of our position would be necessary. It is believed unlikely, however, that the U. S. S. R. wishes to assume a forward position in China.

With regard to legislation for a Military Advisory Group, a small highly proficient but unobtrusive Group can, it is believed, serve a positively useful purpose in China. Over and above the service performed in giving technical assistance and aiding in the creation of a smaller and more efficient Chinese Army, it would demonstrate in a practical way our special concern for China.

The Military Advisory Group Bill as presently drafted provides for the disposal of arms and ammunition and other Government-owned supplies and equipment to China upon such terms and conditions as the President may deem proper. There is also a general Military and Naval Missions Bill for introduction into the present Congress. It is recommended that we support this general Missions Bill and [Page 793] withhold action on the special bill for China. After Congress acts on this bill, affirmatively or negatively, we can determine what action to take on a special bill for China, with particular reference to the matter of supplying military equipment to China. Should we decide to seek legislation for the supply of military equipment, it is strongly recommended that provision be made for the Secretary of State to have the final word with regard to the time, type, and quantity of disposals of military equipment to China.

For the time being it is recommended that we continue to withhold delivery of military type equipment under the 8⅓ Air Group program. Increased activity on the part of the Chinese air force would lay us open to sharp criticism if this activity took the form of strafing and bombing Chinese villages, which is not an unlikely contingency.

China desires to obtain 159 mercantile ships under the Merchant Ship Sales Act.17 It is recommended that we give our approval to the transaction in part or in whole depending upon determination as to the number and type of ships that China can effectively use.

J[ohn] C[arter] V[incent]
  1. Department of State, United States Relations With China (Washington, Government Printing Office, 1949), p. 689.
  2. Ibid., p. 686.
  3. Ibid., p. 607.
  4. Department of State Bulletin, December 30, 1945, pp. 1027, 1030, or Foreign Relations, 1945, vol. ii, pp. 815, 821.
  5. For correspondence on the transfer of ships, see pp. 942 ff.
  6. For correspondence on Export-Import Bank credit, see pp. 1030 ff.
  7. Generalissimo Chiang Kai-shek, President of the National Government of the Republic of China.
  8. Approved March 8, 1946; 60 Stat. 41.