234. Telegram From the Embassy in China to the Department of State1

1663. For EA Assistant Secretary Holbrooke. Subj: PRC Reaction to Taiwan Legislation. Ref: A. Beijing 1602; B. Beijing 1592; C. Beijing 1469.2

1. (S—entire text).

2. Despite the PRC decision to publicize Huang Hua’s March 16 démarche to me on the Taiwan omnibus legislation, Chinese officials have not raised the matter with Codel Ullman,3 despite numerous occasions to do so. CPIFA President Hao Deqing did not mention the Taiwan legislation in his meeting with the Codel on the afternoon of March 24. Nor did Vice Premier Deng Xiaoping raise the matter in his meeting with the Codel on March 26. On the contrary, Deng emphasized the importance of expanding U.S.–PRC trade, spoke repeatedly of the importance of granting MFN to the PRC, and referred to the claims/assets issue as having been “basically solved” during the visit by Secretary Blumenthal.4 His only reference to Taiwan occurred when Deng stated that U.S. trade with the PRC should rise to three or four times the present level of our trade with Taiwan. The atmosphere of our other contacts with the Chinese in recent days has remained good.

3. The evident Chinese decision not to refer to the Taiwan omnibus legislation in their meeting with Codel Ullman indicates that the Chinese have chosen to treat this issue as an Executive branch responsibility and not to lobby their case directly with the Congress. It remains unclear, however, what if any expectations the Chinese may have as to [Page 855] the ability of the Executive branch to alter the legislation at this stage. In my meeting with Foreign Minister Huang Hua on March 16 I gained the impression that he might have had an inaccurate perception of the leeway available to the conference committee to alter the Senate and House version of the bill. It was precisely for this reason that I explained the conference process to him in some detail. Given the frequent press reports from Washington indicating that the administration was prepared to live with the bill in its present form, the Chinese have no reason to assume that the President will not sign the bill.

4. We are left with the question of what exactly the Chinese may have in mind in the event that the legislation is signed into law. Both publicly and privately they have stated that this action would cause “great harm” to our relationship. Privately, Foreign Minister Huang added that the PRC would have no alternative “but to make the necessary response.” If they were making their statements for the record, they could have expressed their dissatisfaction with the legislation in ways that would have pointed less strongly to some reaction on their part if and when the legislation took effect. For what it is worth, however, my Japanese, British and French colleagues have all informed me that they believe that the Chinese have stated their position on the Taiwan legislation essentially for the record.

5. On balance, I consider it unlikely that the Chinese would react to the Taiwan legislation in ways that would fundamentally damage our new relationship. They could, of course, at one extreme, take some demonstrative step such as repudiating the claims/assets agreement. I tend to discount this possibility for a number of reasons, not the least of which is Deng’s comment to Codel Ullman referred to above. Most importantly, by doing so the Chinese would be fundamentally damaging their own economic interests in their relationship with us. It is more likely that the PRC for its own reasons may prefer to postpone formal signature of the agreement until we are further along in the process of extending MFN to them. At the farewell banquet for Codel Ullman on March 26, a Ministry of Finance official made some comments on the claims/assets agreement suggesting that the Chinese may have some concerns that the agreement could be repudiated by Congress. At least one member of the Codel, Congressman Frenzel of Minnesota, has commented that he believes the claims/assets agreement should be presented to Congress in the same package with the Trade Agreement. In any event, we consider it more likely that the Chinese might use the Taiwan legislation as a pretext for delaying signature of the claims/assets agreement than that they would seek to renegotiate the terms of the agreement.

6. At the same time the Chinese have a variety of other measures available to them which they could use to express their displeasure [Page 856] over the Taiwan legislation in ways that would make life here more difficult and complicate our dealings with them. Possibilities include: turning down our proposal for the assignment of Marine guards to the Embassy, dragging their feet on negotiating the Consular Convention, adopting an unhelpful attitude toward our requirements for future Embassy facilities (including land), and delaying or even cancelling high-level visits already scheduled or that we might propose in the future. We would also run a greater risk of a negative PRC reaction on issues such as Skylink5 if they are looking for ways to express their displeasure over the Taiwan legislation while minimizing damage to their own interests.

7. We believe the PRC is not unaware of the many worse versions of the omnibus legislation that were defeated in the Congress and of the close votes on some of these. Nevertheless, the PRC is undoubtedly seriously upset by certain aspects of the legislation, such as those relating to Taiwan properties in the US,6 and we may find this issue returning to plague us in discussing our official property claims with them.

8. We believe the best way to gauge, and if possible mitigate, the Chinese reaction is to provide them promptly with a carefully reasoned response (before the bill is signed into law) in which we affirm both our commitment to the normalization agreement and our conviction that the legislation is consistent with this agreement. In doing so, however, we should make clear that the time has passed when we can make substantive changes in the legislation itself and that any effort to rewrite it could well result in a less desirable version. I defer to the Department as to whether this approach should be made in Washington or here in Beijing.

  1. Source: National Archives, RG 59, Central Foreign Policy File, P850029–2592. Secret; Immediate; Exdis Handle as Nodis.
  2. Telegram 1602 from Beijing, March 24, reported that the Chinese Government made public the démarche by Huang Hua on the Taiwan legislation reported in telegram 1469 (Document 230). The Chinese release noted Huang’s statement that passage of the legislation in its present form would cause great harm to the U.S.–PRC relationship, but omitted the Foreign Minister’s warning that China would have no alternative “but to make the necessary response.” The Embassy commented, “The omission of this statement does not in our opinion indicate that Beijing is now less inclined to take concrete measures to express its displeasure if the bill is signed into law but rather is designed to avoid the appearance of publicly threatening the USG with retaliatory actions.” (National Archives, RG 59, Central Foreign Policy File, P850029–2585) Regarding telegram 1592 from Beijing, see Document 235.
  3. Representative Albert C. Ullman (D–Oregon), Chairman of the House Ways and Means Committee, led a Congressional delegation that visited Tokyo, China, and Hong Kong March 23–April 2. (Telegram 62103 to Tokyo, Beijing, and Hong Kong, March 14; National Archives, RG 59, Central Foreign Policy File, D790116–1138)
  4. See Documents 222, 224, and 225.
  5. The Embassy in Beijing sought permission from Chinese authorities to install Skylink, a satellite communications facility capable of improving the speed and reliability of the Embassy’s telegraphic communications. (Telegram 3429 from Beijing, June 5; National Archives, RG 59, Central Foreign Policy File, D790256–1100) Skylink would supersede high-frequency radio, which would become the backup communications system for the Embassy. (Telegram 72537 to Beijing, March 23; National Archives, RG 59, Central Foreign Policy File, D790136–0410)
  6. The Taiwan Relations Act (Public Law 96–8) stipulates: “For all purposes under the laws of the United States, including actions in any court in the United States, recognition of the People’s Republic of China shall not affect in any way the ownership of or other rights or interests in properties, tangible and intangible, and other things of value, owned or held on or prior to December 31, 1978, or thereafter acquired or earned by the governing authorities on Taiwan.”