184. Telegram From the Embassy in the Republic of China to the Department of State1

8817. Subject: Possible PRC Claims to Taiwan Property.

1. As Washington knows from septels, Deputy Secretary Christopher told President Chiang Ching-kuo and other government leaders that Mr. Christopher understood their concern over assets in the United States which had been generated by economic activity and promised sympathetic and painstaking study of this issue on his return to Washington.2

2. The official concern here is that the PRC will go into courts all over the U.S. and assert claim to a variety of assets. These would include financial holdings such as bank accounts, and perhaps also a wide variety of other things, such as big ticket items on order, like power generators, and perhaps to such things as CAL aircraft etc.

3. We assume that the ROC has made a real effort to move its more readily transferable holdings out of US jurisdiction, and we have no idea from here of what may be left. However, many assets must be left in place if normal economic relations are to continue and grow.

4. The courts would often likely seek guidance from the State Department on the status of this property, which would be quite vulnerable if our response were simply that we recognize the PRC as the sole legal government of China.

5. Such assets stem from economic efforts of the people of Taiwan and are in quite a different category than the Embassy in Washington or other real property used for public purposes.

6. We suggest for consideration that the Department contemplate a formula along the lines of the following for use in situations of litigation over what are essentially economic assets: “The Department of State considers that assets generated by economic efforts of the people of Taiwan are the property of the people of Taiwan.”

7. Such a position would relieve an element of real concern to the leadership here and would be consistent with President Carter’s statements that the U.S. intends to maintain economic ties with the people of Taiwan and does not intend the terms of normalization to jeopardize the well being of the people here.

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8. On a separate but related subject, we would like to offer a thought on the position Assistant Secretary Holbrooke took with PRCLO Deputy Han Hsu as set forth in State 325513.3

9. We think Holbrooke skillfully set forth the position that the PRC should be the plaintiff in any legal proceeding to acquire the Embassy and other real property used for public purposes. We recognize that in such a case the USG would naturally have to certify to the court that the USG recognizes the PRC as the sole legal government of China as of January 1, 1979. However, we are troubled that the possibility is still under consideration that the USG itself might consider instituting a legal action as plaintiff. As we see it, such an affirmative USG action would be read here as a symbol of hostility to Taiwan at a time when they are already feeling a great sense of international isolation and when we are seeking to establish a new constructive relationship with them. Furthermore, as we see it, such a step would not be necessary since the PRC itself could readily be the plaintiff and we need not allow them to push us into the forefront.

  1. Source: National Archives, RG 59, Central Foreign Policy File, D780539–0670. Secret; Priority; Exdis. Repeated to Hong Kong and Beijing.
  2. See Document 183.
  3. See Document 182.