794A.5 MSP/3–2353

No. 84
The Chargé in the Republic of China (Rankin) to the Department of State

No. 513


  • Embassy Despatch No. 483, March 13, 1953, “MDAP Budget Estimate for Fiscal Year 1954”.1


  • Proposed MDAP Equipment Program and Country Statement for Formosa, Fiscal Year 1954.

Enclosed are one copy each of the Proposed 1954 MDAP Equipment Program and the accompanying Country Statement (classified and unclassified sections) prepared by MAAG Formosa for budget presentation purposes.2 These documents together with information transmitted as enclosures to the despatch under reference comprise the complete tentative FY 1954 budget presentation for MAAG, Formosa, now being reviewed by the Defense Department. The projected matériel program calls for expenditure of $110,000,000 in Fiscal Year 1954.

Among the strategic assumptions included in the Country Statement are several which anticipate revision of United States policy regarding the activity of the armed forces of Free China. In addition to the present policy of utilizing these forces for the defense of Formosa and for launching limited raids on the mainland, the following are also listed in justification of present and projected military build-up as “probable missions”:

Larger raids on the mainland including the employment of the Chinese Air Force;
Blockade of the mainland coast;
Invasion of the mainland;
Assignment of an army of 25,000 to the Korean front;
Operations in Southeast Asia in the “far distant future”.

For the present MAAG has requested the Ministry of Defense not to utilize aircraft in raids on the mainland and not to alter [Page 161] radically the present pattern and tempo of any raids on Communist-held territory. MAAG is to be informed in advance of any raids participated in by more than 500 men.

On the military side here there has been some preliminary discussion of the question of planning an effective blockade of the mainland. General Chow, Chief of General Staff of the Ministry of National Defense, recently stated in confidence that a blockade of the stretch of China coast between Ta-ch’en and Swatow for interception of only Communist Chinese vessels would not justify the effort because of the small amount of shipping which would be affected. The Ministry of National Defense is willing to consider planning for Chinese execution of a thorough blockade of this section of the coast, but has pointed out in this connection that it would request the United States to render the necessary political support vis-à-vis other nations whose shipping would be intercepted. Chow estimates that this type of blockade would “inflict limited damage” on the economy of Communist China but could not be expected to achieve spectacular results. He is of the opinion that the only type of blockade which could inflict serious damage on the Peiping regime would be a total blockade of the entire coast in which both United States and Chinese forces participated.

As indicated in previous despatches of this mission, the scope and nature of planning, training and equipping here goes beyond the minimum required for purely defensive purposes. Now that delivery of equipment has been accelerated and the end of the MAAG program for building up the “potential” of Chinese Forces is in sight (1955 is the target year), the need for a definitive policy framework regarding prospective utilization of these forces becomes more acute. MAAG estimates that once the present build-up has been completed an annual grant-in-aid of $40,000,000 for military equipment and supplies will be required to maintain these forces on Formosa. This does not include costs of replacement of obsolescent matériel or of ammunition for other than training purposes. Nor does it include the possible extension of the MAAG program to include off-shore Chinese forces, a request which MAAG has recently referred to the Defense Department.

In addition to the proposed increase of MAAG military personnel from 891 to 2,540 reported in the despatch under reference, the FY 1954 Budget Estimate calls for a new Signal Battalion of 700, which brings total requested MAAG military personnel up to 3,240. The Signal Battalion personnel have been requested for the purpose of operating a communications system designed to improve liaison among the Seventh Fleet, MAAG Headquarters and the Chinese forces. The remainder of the increase in military personnel represents MAAG’s estimate of what is needed to prepare Chinese [Page 162] forces for any or all of the above missions with maximum speed and thoroughness, although the more modest missions would require fewer Americans.

K. L. Rankin
  1. Not printed.
  2. Neither attached to the source text.