Foreign Relations of the United States, 1981–1988, Volume I, Foundations of Foreign Policy

54. Memorandum From James Lilley of the National Security Council Staff to the President’s Assistant for National Security Affairs (Allen)¹

Washington, June 30, 1981

SUBJECT

• The President’s Comments on the Future of Marxism in China (S)

I understand from both Rich Armitage and Don Gregg that the President said to Fraser that the Chinese, after the passing of the long marchers, would move away from Marxism.² (S)

I can understand how the President could reach this judgment:

— He correctly believes that Marxism is a deteriorating political system. It simply has not worked and evidently a new permutation should arise. (S)

— Haig has been saying that ideology in China is almost dead. He compares his 1972 trip³ where ideology dominated to his 1981 trip⁴ where few ideological remarks were made. Hence, his conclusion. The Secretary unfortunately does not read Chinese and therefore did not scan the People’s Daily, which is still loaded with Marxism, Leninism and Maoism.⁵ (S)

— Holdridge has said publicly recently that the Chinese economy is a market economy and based on pure pragmatism.⁶ Expert economists on China were shocked to hear this coming from him because the facts do not support this. (S)

I have asked CIA to come up with a short, concise paper on the Chinese economy and the role of Marxism, now and in the foreseeable future. I have asked them for a one-page of key judgments and have told them I want this for high level readership.⁷ (S)

I have taught The Chinese Economy at the graduate school level for 3 years and I can assure you that the base of the Chinese economy is Marxism/Leninism—central planning and government ownership of the means of production. The moves away from this are on the edges and are done only after great struggle.⁸ (S)

1. Source: Reagan Library, Donald Gregg Files, Subject File, 1980–1982, Foreign Policy 06/01/1981–06/30/1981; NLR–221–11–51–11–5. Secret. Outside the system. Sent for information. A stamped notation in the top right-hand corner of the memorandum reads: “RVA has seen.”
2. Australian Prime Minister Fraser visited the United States, June 29–July 1. He met privately with the President in the Oval Office on June 30 from 10:28 until 11:19 a.m. From 11:19 a.m. until 12:15 p.m. the President, Fraser, and other U.S. and Australian officials met in the Cabinet Room. (Reagan Library, President’s Daily Diary) The memorandum of conversation is scheduled for publication in Foreign Relations, 1981–1988, vol. XXXII, Southeast Asia; Pacific. For the remarks made by the President and Fraser at a welcoming ceremony on the South Lawn of the White House and for the remarks made by the President to reporters assembled on the South Lawn, following the larger meeting in the Cabinet Room, see Public Papers: Reagan, 1981, pp. 580–583. In his personal diary entry for June 30, the President wrote: “Good meetings reinforcing a most unique friendship which exists between our 2 countries.” (Brinkley, ed., The Reagan Diaries, vol. I, January 1981–October 1985, p. 52)
3. Reference is to Haig’s January 1972 trip to Beijing to assist in preparations for Nixon’s February 1972 trip. For additional information, see Foreign Relations, 1969–1976, vol. XVII, China, 1969–1972, Documents 183 and 184, and Foreign Relations, 1969–1976, vol. E–13, Documents on China, 1969–1972, Documents 75–79. In his memoir, Haig recounted: “The Chinese seemed to regard my visit in January 1972 as a dress rehearsal for Nixon’s; everything that he would do when he came to China, I did first as his stand-in.” (Haig, Caveat, p. 201)
4. Haig departed Washington on June 10 and, after visiting Hong Kong, June 12–14, traveled to Beijing, June 14–17, to meet with Hua, Zhao, and other senior Chinese officials. Following Beijing, Haig traveled to Manila, June 17–20, to participate in the ASEAN foreign ministers’ meeting and Wellington, June 21–23, for a meeting of the ANZUS Council. For the text of Haig’s remarks and news conferences made during the trip, in addition to the text of the communiqué issued at the conclusion of the ANZUS meeting, see Department of State Bulletin, August 1981, pp. 34–50. Documentation on Haig’s Beijing meetings is scheduled for publication in Foreign Relations, 1981–1988, vol. XXVIII, China, 1981–1983. For Haig’s subsequent recollections about the visit, see Haig, Caveat, pp. 205–208.
5. In the right-hand margin, Allen bracketed this paragraph and wrote: “you are one hundred per cent correct!”
6. Not further identified.
7. Not found. In the right-hand margin next to this paragraph, Allen wrote: “OK!!”
8. In the right-hand margin, Allen bracketed this paragraph and drew a line from the bracket to the margin below and wrote, “Jim—I believe we need a reasoned 1 page memo for P on this. I agree with you, and before he gets too accustomed to his →,” continuing on the back page: “new theory, I’d like to temper it. RVA.”