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108. Telegram From the Department of State to the Embassy in the Republic of China0

614. Department’s 594, sent CINCPAC unnumbered.1 Harriman called in Chinese Minister Kiang this afternoon to express deep concern of USG over GRC military preparedness program.2 Harriman explained that in view of importance of subject he had expected to meet with Amb. [Page 224]Tsiang, but Ambassador Stevenson had asked that Amb. Tsiang not be called away from his duties as Security Council Chairman during discussion delicate Kashmir question. Urgency of business at hand made delay undesirable.

Harriman said USG is very disturbed over large increase in military spending of nature only vaguely known to us. We are shocked that such program has been undertaken without consulting us despite our past close working relationship. We were further disturbed by unsympathetic response of Vice President Chen when problem of increased military spending was raised with him by our Charge few days ago.3 Harriman said we are concerned over possible inflationary effect of new program or, even if program covered by new taxes, by diversion of resources from investment necessary to maintenance of strength and growth of Taiwan economy needed to meet future possible emergency or exploit opportunity. Jeopardizing this strength seems to us most unwise. GRC appears to be disregarding past common understandings, including declaration in 19 point economic reform program of January 19604 to effect military expenditures would be kept at current level. Harriman emphasized that he spoke for highest levels of USG in requesting that new military preparedness program be held in abeyance until it can be reviewed by US and discussed by responsible US officials in Taipei. He asked that our Charge and other appropriate senior US officials be given fullest information on new program as soon as possible.

Harriman also noted we would want opportunity to analyze effect of new taxes. Harriman further noted concern of USG over new upsurge in publicity in Taipei on return to mainland in connection with new taxes and stated this publicity appears to violate past GRC assurances that such publicity will be minimized.

Kiang responded Chinese Embassy has received no official report on new program. He promised to report fully views expressed by Harriman and will urge early reply.

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Harriman stated mere reply would not be sufficient. What is required is action in terms of immediate discussions in Taipei with appropriate American officials.

  1. Source: Department of State, Central Files, 793.5/4-2662. Secret; Priority; Limit Distribution. Drafted by Yager, cleared in draft by Harriman, and approved by Rice. Repeated to CINCPAC.
  2. Document 106.
  3. In a telephone conversation on May 3, Harriman and Michael Forrestal of the NSC staff briefly discussed Harriman’s plan to talk to the Chinese Ambassador. According to notes of the conversation made in Harriman’s office, Forrestal stated that he and Bundy were opposed to sanctions but thought “nothing at all wrong with being quite firm [about] our inability to be of any really useful help to them if they do not tell us what they are doing.” Harriman replied, “We can’t let them stop their growth—the example they are giving compared to mainland China.” (Library of Congress Manuscript Division, Harriman Papers, Kennedy-Johnson Administrations, Telecons)
  4. Clough reported the conversation in telegram 766 from Taipei, May 2. (Department of State, Central Files, 793.5/5-262) Telegram 770 from Taipei, May 4, reported similar conversations between other U.S. and GRC representatives. (Ibid., 793.5/5-462) Clough commented in telegram 775, May 4, that although the reaction had been essentially negative, this might change as the full import of the representations sank in. He noted that Chiang Ching-kuo had been more forthcoming and might affect an improvement in the GRC attitude. (Ibid.)
  5. Reference is to the “Accelerated Economic Growth Program” dated January 14, 1960, enclosed with a letter of that date from K.Y. Yin, Vice Chairman of the Council for U.S. Aid, to Haraldson. Paragraph 9 stated the GRC intention to maintain defense expenditures (in constant dollars) at the current level, “at least in the immediate future.” (Washington National Records Center, RG 84, FRC 66 A 878, Taipei Embassy Files: Lot 65 F 163, 500—Accelerated Program for Taiwan) See Foreign Relations, 1958-1960, vol. XIX, p. 649, footnote 2.