No. 1357
[Enclosure]
Memorandum Prepared in British Foreign Office
China
General
It may be convenient to indicate briefly our assessment; of the
general situation in China before reviewing the particular problems
raised in the United States Ambassador’s letter to Mr. Bevin of the
22nd July.
2. There do not seem to be any further grounds for hope that the
Communists will fail in their bid for complete power in China.
Effective or prolonged resistance cannot be expected from the
discredited Nationalist Government, which can no longer hope for
large-scale outside assistance, nor, a fortiori, from any splinter
factions into which the Nationalist Government may disintegrate.
Planning must therefore be on the assumption of Communist domination
of the whole of China in the near future.
3. There is no doubt that the present leaders of the Chinese
Communist Party are orthodox Marxists–Leninists and that their
present strongly pro-Soviet policy constitutes a serious threat to
Western political and economic interests not only in China but also
in South East Asia.
4. As regards South East Asia it would appear of cardinal importance
to encourage the establishment of an effective anti-Communist front
to prevent Communist encroachment beyond the borders of China. As
regards China itself, it is considered that at the present stage any
outside attempt to prevent the Communists from attaining complete
power in China would not only be bound to fail but would rally the
traditionally xenophobe Chinese behind their new rulers, and that to
display a general and avowed hostility to the new régime is
calculated to drive it further into the arms of Moscow.
5. It is therefore considered that the only hope of encouraging the
emergence in China of a less anti-Western tendency is to give the
new régime time to realize both the necessity of Western help in
overcoming its economic difficulties, and the natural
incompatibility of Soviet imperialism with Chinese national
interests (e.g. in Manchuria).
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Every opening for emphasizing that Moscow’s designs are incompatible
with a strong and independent China should be seized. In general we
wish to avoid as far as possible head-on conflict with the
Communists at present, though we have no intention of pursuing a
policy of appeasement on major issues.
Economic
6. For the following reasons it is considered that Western commercial
and financial interests should endeavour to maintain themselves in
China for as long as possible:
- (a)
- If and when the Communists begin to realize the necessity
for trade with the West in overcoming their economic
difficulties, it is to be presumed that their first advances
will be made not to governments but to private concerns, and
it is therefore important that there should be Western
concerns in China which can be approached. If at a later
stage the Communists wish to make an approach to governments
it is considered that their proposals should be considered
on their merits. His Majesty’s Government have, of course,
no intention of making official advances to the Communists,
but they equally do not wish to show open hostility by
dissuading British commercial interests from entering into
normal commercial relations with them.
- (b)
- Although there can be no doubt about the fundamental
hostility of Chinese Communism to foreign mercantile
communities, it nevertheless remains possible that
experience may induce a more realistic attitude in the
Communist authorities, who are at present themselves to some
extent prisoners of their own propaganda. There may be few
grounds for optimism as to the future; but we should be
unwise to abandon what remains of our position in China
until it becomes abundantly clear that it is untenable. It
is of course practically certain that long-established and
deep-rooted commercial establishments and connections, once
abandoned, could never be restored.
- (c)
- In view of its position in Hong Kong and South East Asia
the United Kingdom has, of course, every reason for being
anxious to avoid mercantile transactions of a kind which
might result in increasing the military strength of
Communist China. It is not considered, however, that the
continuance of normal trade in civilian requirements need
result in any perceptible accretion to the war potential of
a Communist administration in China, while any hardships
resulting from the cessation of trade would fall, in the
major industrial towns at any rate, on the population as a
whole. These would, of course, be represented by the Chinese
Communists as entirely due to the hostility of the
“Imperialist” powers.
- (d)
- It is recognized that foreign economic interests in China
are likely sooner or later to be faced with the threat of
expropriation. Provided that the normal channels of commerce
are still open the Communist desire for trade with the West
may conceivably be strong enough for some sort of trade and
compensation agreement to be secured eventually.
- (e)
- But perhaps more important than the foregoing
considerations is the fact that foreign trading communities
constitute a major element
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in Western influence in China. We
consider that it is of the first importance to maintain for
as long as possible the maximum Western contact and
influence behind the Asiatic Iron Curtain, particularly
bearing in mind that it may conceivably prove that one of
the tasks most beyond the powers of the Communist régime may
be that of regimenting and controlling the deep-rooted
trading propensities of the individual Chinese. So long as
hope remains of exploiting the Chinese instinct to trade to
the detriment of the Communist cause complete abandonment of
our position in China would appear to be premature, to say
the least.
- (f)
- Finally, in the long term, the potentialities of China
under a strong and efficient Government as a source of raw
material and foodstuffs and as an export market should not
be forgotten. It would be a misfortune should at some future
time these potentialities be realized if the western world
were then cut off from what might become available. It must
still be our hope that opportunities will eventually arise
for co-operation by the western world with an effective
Chinese Government for the economic development of the
country for the benefit of the Far East and the world as a
whole. The severance of existing commercial links with China
would run entirely counter to such an objective, however
remote it may seem for the present.
7. For the above reasons, although our merchants in China may
eventually have to cut their losses and leave, it is considered that
it is neither in our political nor in our economic interests that
they should do this if it can be avoided; and we do not share the
view, which we gather to be that of the United States authorities,
that foreign merchants who have stayed behind have put themselves in
the position of hostages in their search for private gain and are
therefore deserving of little sympathy. Moreover it must be
remembered that the British firms in China are private traders. The
decision whether it is worthwhile for them to continue to try to
keep alive their activities must still primarily be theirs. His
Majesty’s Government would not in existing circumstances feel
justified in seeking to prevent those who are willing and able to go
on trading and would certainly not wish to be responsible by such
prevention for any ensuing losses.
8. This does not, of course, mean that British mercantile communities
in China would be advised to continue indefinitely to do business on
humiliating and unequal terms. It is intended that British concerns
in China should be encouraged to co-operate fully with each other,
and with the commercial communities of other friendly Powers, so
that as trade opportunities offer they will be in a position to take
advantage of Communist needs to secure improvements in the
conditions under which they are permitted to operate.
Evacuation
9. As indicated above, His Majesty’s Government are not in favour of
a premature abandonment of British interests in China, and they
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consider that the longer
British merchants and British missionaries (the two main elements of
the British communities in China) are able to maintain a footing in
China the more hope there is of maintaining British political and
economic interests.
10. Broadly speaking the British communities in China are still
determined to maintain themselves if they can, though of recent
weeks there has been some feeling in favour of evacuation. If
British nationals want to leave His Majesty’s Government will
certainly furnish such assistance as they can to enable them to do
so, but it is not proposed, at present at least, to advise them to
do so wholesale.
Recognition
11. The Charter of the United Nations15 (Articles 23 and 27(3)) appears to be so
framed that unless there is a Chinese representative the Security
Council can take decisions only on procedural matters. It therefore
seems essential that de jure recognition
should not be withdrawn from one Chinese Government until de jure recognition can be accorded to its
successor. The questions of continuing to recognize the Nationalist
Government and of according recognition to the Communists thus
appear to be two facets of the same problem.
12. No question of according de jure or de facto recognition to the Communists can
arise until the Communists form a Government claiming to be of
national character. However, there are various indications that the
Communists hope by their present offensive southwards to acquire so
much territory as to be clearly the effective rulers of China. They
will then probably set up a Government, to which Soviet recognition
will doubtless promptly be accorded. The Communists apparently hope
that this stage will be reached by mid-autumn 1949.
13. It is thus likely that the recognition question will become acute
in the next few months. There are, however, still too many
undetermined factors for detailed consideration of the action to be
taken in all possible contingencies to be profitable at this stage.
The issues therefore can be usefully discussed only in general
terms.
14. At the worst, the relations of the British Commonwealth and North
Atlantic Powers with a Communist Chinese Government after
recognition may follow the pattern of their relations with Soviet
satellite states in Eastern Europe. There is however the possibility
that the pattern will eventually develop along the lines of our
present relationship with Jugoslavia, and it is therefore considered
that the Western Powers should be careful not to prejudice future
possibilities by developing an openly hostile attitude towards a
Communist régime from the outset.
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15. The political objections to precipitate recognition of a
Communist régime are obvious. On the other hand to withhold
recognition from a government in effective control of a large part
of China is legally objectionable and leads to grave practical
difficulties regarding the protection of Western interests in China.
It is most unlikely that the fulfilment of any special conditions
can be exacted in return for recognition of the Communist régime,
and it is therefore probable that after a certain stage delay in
proceeding with recognition might seriously prejudice Western
interests in China without any compensating advantages being
obtained. The Chinese Communists themselves are unlikely to be
seriously inconvenienced by the withholding of recognition. For
their part they will probably decline to enter into diplomatic
relations with any Power which continues to recognize the
Nationalist Government.
16. Since the Nationalist Government is not considered to be any
longer capable of maintaining effective resistance, the question of
its continued recognition by the Powers should be considered on a
basis of practical convenience rather than of sentiment. If there is
Nationalist control in Formosa and/or in Western China it may be
considered sufficient to regard the authority there as the de facto authority in control. The most
important factor governing continued recognition of the Nationalist
Government will however be the question of United Nations
representation.
17. As regards Chinese representation in the United Nations
Organization, it seems probable that, according to the Communist
timetable as far as it can be estimated, the National Government
will continue to represent China during the forthcoming session of
the Assembly. But the possibility cannot be excluded that a change
of China’s representation will become a live and controversial issue
even while the Assembly is in session. It is impossible to determine
in advance what the attitude of the Commonwealth and North Atlantic
Powers should be in such an event, but clearly it will be desirable
that there should be close and continuing consultation between
them.
[
London
,] 15
August, 1949.
