Foreign Relations of the United States, 1955–1957, China, Volume III

281. Memorandum From the Executive Secretary of the National Security Council (Lay) to the National Security Council¹

Washington, September 9, 1957.

SUBJECT

• U.S. Policy Toward Formosa and the Government of the Republic of China

REFERENCES

A.

NSC 5503²

B.

Memo for NSC from Executive Secretary, subject: “Report by the Interdepartmental Committee on Certain U.S. Aid Programs”, dated December 5, 1956³

C.

NSC Actions Nos. 1312–e⁴ and 1624–c⁵

D.

NIE 43–2–57⁶

The enclosed draft report on the subject, prepared by the NSC Planning Board pursuant to NSC Action No. 1624–c, is transmitted herewith for consideration by the National Security Council at its meeting on Monday, September 23, 1957.

Also enclosed, for the information of the Council, are the following:⁷

• Annex A: “Summary Statement of Current Military and Economic Programs for Taiwan”, of which the Financial Appendix is a part.
• Annex B: “Economic Problems and Program in Taiwan” (prepared by the Department of State), with comments thereon by the Treasury Department.
• Annex C: “Defense of Formosa” (pertinent extracts from Public Law 4, 84th Congress, January 29, 1955).

Such revisions in NSC 5503 as are adopted and approved, after consideration of the enclosed report, will be incorporated in a new statement of policy to supersede NSC 5503 and NSC Action No. 1312–e–(2).

James S. Lay, Jr.

[Enclosure]

REPORT BY THE NSC PLANNING BOARD TO THE NATIONAL SECURITY COUNCIL ON THE REVIEW OF U.S. POLICY TOWARD FORMOSA AND THE GOVERNMENT OF THE REPUBLIC OF CHINA

1. Pursuant to Council direction (NSC Action No. 1624–c), the NSC Planning Board has reviewed our existing policy toward Formosa and the Government of the Republic of China (NSC 5503, approved January 15, 1955). This review has been made against the background of the Report by the Interdepartmental Committee on Certain U. S. Aid Programs (NSC 5610, August 3, 1956⁸), the report of the Joint Chiefs of Staff on the Taiwan force levels (December 5, 1956), the OCB Progress Report on Taiwan (July 3, 1957⁹), the San Francisco speech of the Secretary of State on U.S. policies toward Communism in China (June 28, 1957¹⁰), and NIE 43–2–57, “The Prospects for the Government of the Republic of China”, dated August 27, 1957.

2. The Planning Board has prepared and there is attached as Annex A, an up-to-date summary statement of current military and economic programs for Taiwan, together with a Financial Appendix covering the period through FY 1960.

Missions of GRC Forces

3. In the Planning Board discussion, question arose as to the interpretation of the missions of the GRC armed forces, as stated in paragraphs 3 and 13 of NSC 5503:

“3. Continued development of the military potential of GRC armed forces (a) to assist in the defense of Formosa and the Pescadores and (b) to take action in defense of the GRC-held off-shore islands, equipped and trained to contribute to collective non-Communist strength in the Far East and for such other action as may be mutually agreed upon under the terms of the Mutual Defense Treaty.”

“13. Continue military assistance and direct forces support for the GRC armed forces to enable them to assist in the defense of Formosa and the Pescadores, to take action in defense of the GRC-held off-shore islands, and so equip and train them as to enable them to contribute to non-Communist strength in the Far East and for such other action as may be mutually agreed upon under the terms of the Mutual Defense Treaty.”

4. The two differing interpretations of the missions were as follows:

a. NSC 5503 was intended to limit the missions to defense of Taiwan, the Penghus, and the off-shore islands. That the GRC forces contribute to non-Communist strength in the Far East is only a byproduct of these missions and not a separate and distinct mission justifying additional build-up of GRC forces. The intent of NSC 5503 was to oppose the development of GRC forces to conduct offensive operations against mainland Communist China (paragraph 11).

b. NSC 5503 was not intended to effect a basic change in the missions of GRC forces, and such missions continue to include, as separate and distinct missions in addition to defense, (1) contributing to the non-Communist deterrent to aggression and to the collective defense against aggression in the Far East, and (2) being prepared to conduct offensive operations outside Taiwan, the Penghus, and the off-shore islands, as an element in this contribution.

5. The Planning Board understands that the Department of State and the Joint Chiefs of Staff have interpreted NSC 5503 as indicated in paragraph 4–b above, for the following reasons:

a. The language of paragraph 11 of NSC 5503 leaves the door open for the use of GRC forces offensively in mainland China if the President should so decide. The new language was intended to reflect the President’s decision of September 28, 1954,¹¹ suspending “for the time being” large-scale raids on Chinese Communist territory, authorized by paragraph 10 of NSC 146/2,¹² but was not intended to eliminate for all time the possibility that GRC forces might be used offensively (for example, in the event of renewal of aggression in Korea). The exchange of notes related to the Mutual Defense Treaty also leaves the way open for such actions with U. S. agreement.

b. GRC forces are in fact a key element in the non-Communist collective military strength in the Far East. Paragraph 22, which calls for encouraging development of a Western Pacific collective defense arrangement, constitutes recognition of their importance. The GRC forces are a standing threat to the Chinese Communist flank, reducing the likelihood of Chinese Communist aggression elsewhere in the Far East. They are a more valuable potential military instrument than other non-Communist Asiatic forces because, used against the mainland, they would have a powerful political as well as military effect.¹³

c. The Mutual Defense Treaty, to which reference is made in the statement of missions in NSC 5503, obligates the GRC to develop its capacity to resist armed attack against any of the island territories of the United States in the Western Pacific, and such other territories as may be determined by mutual agreement.

6. In order to clarify the missions of the GRC forces, the State representative suggests rewording paragraphs 3 and 13 of NSC 5503 as follows:

“3. Continued development of the military potential of GRC armed forces (a) to assist in the defense of Formosa and the Pescadores; (b) to take action in defense of the GRC-held off-shore islands; (c) to take such other action as may be mutually agreed upon under the terms of the Mutual Defense Treaty; and (d) to contribute to collective non-Communist strength in the Far East.”

“13. Continue military assistance and direct forces support for the GRC armed forces to enable them to assist in the defense of Formosa and the Pescadores, to take action in defense of the GRC-held off-shore islands, to take such other action as may be mutually agreed upon under the terms of the Mutual Defense Treaty, and to enable them to contribute to collective non-Communist strength in the Far East.”

7. The Bureau of the Budget representative believes that paragraph 4–a above is the correct interpretation, and that accordingly GRC force levels and personnel strengths should be reviewed on that basis. The following reasons were advanced by the Bureau of the Budget representative:

a. An interpretation of U.S. policy such as set forth in paragraph 4–b would state an unrealistic objective. Even though the GRC armed forces have received substantial U.S. support in recent years, they are incapable without U.S. intervention of defending even their own territory. Changing strategic concepts together with the problem of increasing age (now averaging over 35 years for the mainland Chinese) and lack of technical preparation of the Chinese forces, will further reduce the possibility of a contribution beyond that of assisting in defending their own territory. The experience of the past decade has indicated that there would be practical difficulties in the utilization of the Chinese forces elsewhere in Asia. The increasing ratio of Formosans (now over one-third) in the GRC forces will decrease the readiness of the forces to fight elsewhere.

b. Perpetuation of the assumption that the Chinese forces have a basic capability and mission beyond the defense of their own territory continues to lead to diversion of U.S. resources into programs running counter to prudent U.S. advice and inhibits the attainment of other U.S. objectives with respect to Taiwan, including progress toward self-support.

GRC Force Levels and Personnel Strengths

8. Under the foregoing interpretation by the State and JCS representatives of the missions of the GRC forces, the position of the JCS representative was that the force levels and personnel strengths of the GRC forces as now constituted were necessary from a military point of view. The State representative, in accepting this judgment, stated that these forces were also necessary from a political and morale point of view.

9. Among the factors bearing on reduction of GRC force levels which were considered but rejected by the State and JCS representatives in the Planning Board, were:

a. The possibility that the provision to GRC forces of some modern conventional weapons, and the introduction into Taiwan of US-manned dual-purpose weapons, which are necessary to meet changes in Chinese Communist capabilities, could reduce GRC force requirements. As an example, reference was made to the US-manned Matador unit introduced in May 1957. The parallelism of the Korean case was also argued.

In response, it was argued that the Korean case is quite different from that of Taiwan. The Korean Government is in its homeland and can accept the concept of a primarily defensive military establishment. The Chinese Nationalists are exiles from their homeland and it is difficult for them to accept a primarily defensive concept. As to the introduction of the Matador flight in May 1957, it is considered that such introduction will have no effect on GRC force levels.

b. The possibility that the US–GRC Mutual Defense Treaty (under which we are bound to go to Taiwan’s aid if she is attacked) reduces the requirements for GRC forces. This, it was felt, might be of particular significance in view of the great importance of naval and air capabilities, which the United States must largely supply, in the defense of GRC territories against an attack by Communist Chinese forces.¹⁴

In response it was argued that the Treaty commits the United States to assist only in the defense of Taiwan and the Penghus. By an Executive understanding with the Senate, a “Minute of Agreement” under the Treaty is required if defense of the off-shore islands is included. The GRC must therefore undertake to defend these islands. (106,000 GRC ground forces are stationed in the off-shore islands.) Furthermore, the Treaty is a mutual defense arrangement and the GRC is committed to aid the United States if its Western Pacific territories are attacked.

c. The advancing age of members of the GRC forces born on the mainland requires the GRC to recruit an increasing percentage of native Taiwanese in the armed forces. (The proportion is about one-third at present, and will probably not go beyond 42% for the next two to three years. Beyond that date the ratio will climb steadily for an indefinite period.) The GRC fears that induction of Taiwanese will reduce the efficiency of its forces for offensive action against the mainland because of the lack of interest in such an operation on the part of the Taiwanese. Also, the Taiwanese are said to dislike the mainlanders. Thus, it was suggested that the GRC may soon be faced by a dilemma—either to eliminate the military objective of return to the mainland, or gradually to cut the overall size of their forces in order to retain a satisfactory ratio between the Taiwanese and mainlanders.

In response, it was argued that under the interpretation of the missions of GRC forces in paragraph 4–b above, return to the mainland was not the U.S. goal. Attitudes of the Taiwanese toward the mainlanders were said to be improving. The Taiwanese are good fighting men, and there are no grounds for the conclusion that forces with a large Taiwanese component would be unreliable in the roles envisioned in the proposed amendment of paragraph 3 of NSC 5503.

d. Reduced resources of the United States for defense efforts overseas. It was argued that the cost to the United States of maintaining members of the GRC armed forces is among the lowest in the Free World.

Other Proposed Changes in NSC 5503

10. The Planning Board suggests the following change in paragraph 10 of NSC 5503, in order to broaden the clause “through United Nations action”, and to conform to the text of Public Law 4 (84th Congress, January 29, 1955):¹⁵

“Seek to preserve, through United Nations action if appropriate, the status quo of the GRC-held off-shore islands. Provide to the GRC forces, military equipment and training to assist them to defend such off-shore islands, using Formosa as a base. U.S. forces will be used to assist the Chinese Nationalists to defend the GRC off-shore islands from Chinese Communist attacks whenever the President judges that such attacks are parts of, or definite preliminaries to, attacks against the main positions of Formosa and the Pescadores.”

The adoption of the foregoing paragraph would supersede NSC Action No. 1312–e–(2), January 21, 1955:

“e. Agreed that, pending either evidence of de facto acquiescence by the Chinese Communists in the U.S. position regarding Formosa and the Pescadores or action by the United Nations restoring peace and security in the general area, the U.S. should, with appropriate use of U. S. armed forces:¹⁶

. . . . . . .

“(2) For the purpose of securing Formosa and the Pescadores against armed attack, assist the Chinese Nationalists to defend the Quemoy Islands and the Matsu Islands from Chinese Communist attacks so long as such attacks are presumptively made by the Chinese Communists as a prelude to attack upon Formosa and the Pescadores.”

11. The Planning Board suggests the following revision of paragraph 15:

“Encourage and assist the GRC, through such means as offshore procurement and technical advice, to maintain on Formosa selected arsenals and other military support industries.”

12. The representative of the Bureau of the Budget proposes that there be added to paragraph 17 of NSC 5503, the underlined portion reproduced below:¹⁷

“17. Show continuing U. S. friendship for the GRC and the Chinese people, while avoiding any implication of an obligation to guarantee the former’s return to power on the mainland; however, make clear to the GRC that—except in the event of substantial change in the world situation or of conditions on the mainland of China—our future military and economic assistance programs will not be premised on the assumption of the GRC’s return to power on the mainland.”

13. The Planning Board suggests that throughout NSC 5503 the words “Taiwan” and “Penghus” be substituted for the words “Formosa” and “Pescadores”.

14. The Planning Board carefully examined all other provisions of NSC 5503, particularly paragraph 14 (covering coordinated military planning with the GRC), paragraphs 18, 26, and 27 (covering social, economic, political, and fiscal reforms), and paragraph 22 (covering a possible Western Pacific collective defense arrangement), but suggested no change at this time in any of these paragraphs.

[Here follow the annexes noted in the covering memorandum from Lay to the National Security Council.]

1. Source: Department of State, S/S–NSC Files: Lot 63 D 351, NSC 5503 Series. Top Secret. Copies were also sent to the Secretary of the Treasury, the Director of the Bureau of the Budget, the Chairman of the Joint Chiefs of Staff, and the Director of Central Intelligence.
2. See vol. ii, Document 12.
3. Not printed. (Department of State, S/S–NSC Files: Lot 63 D 351, NSC 5610 Series)
4. See vol. ii, Document 26, footnote 10.
5. NSC Action 1624–c was taken at the 301st meeting of the NSC on October 26, 1956, during discussion on a “Report by the Interdepartmental Committee on Certain U.S. Aid Programs”. This action “directed the Planning Board to review the scope and allocation of military and non-military foreign aid, for Korea, Pakistan, Turkey, Iran and Taiwan on a priority basis, and recommend to the NSC appropriate revisions in existing policies which will take fully into account the political implications of such revisions, the economic considerations presented in the Report by the Interdepartmental Committee on Certain U.S. Aid Programs, and the military advice presented by the Joint Chiefs of Staff in the reports referred to above”.
6. Supra.
7. Annexes A, B, and C are attached but not printed.
8. Not printed. (Department of State, S/S–NSC Files: Lot 63 D 351, NSC 5610 Series)
9. Not printed. (Ibid., NSC 5503 Series)
10. Document 268.
11. For a discussion of the President’s decision, see the memorandum by Cutler, September 26, 1954, Foreign Relations, 1952–1954, vol. xiv, Part 1, p. 661.
12. NSC 146/2, “United States Objectives and Courses of Action With Respect to Formosa and the Chinese National Government”, November 6, 1953, ibid., p. 307.
13. The CIA Adviser questions the intelligence basis for the last two sentences of paragraph 5–b. [Footnote in the source text.]
14. U.S. forces based on or operated from Taiwan and U.S. forces in the area which might be available in the event of a full-scale Chinese Communist attack on Taiwan and the Penghus are listed in Section II of the attached “Summary Statement of Current Military and Economic Programs for Taiwan”. [Footnote in the source text. The attachment cited is not printed.]
15. See Annex C. [Footnote in the source text. Annex C is attached but not printed.]
16. The following ellipsis appears in the source text.
17. Printed here as italics.