THE PROSPECTS OF THE CHINESE NATIONAL GOVERNMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A005800020001-7
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: December 27, 2016
• Document Release Date: July 17, 2013
• Sequence Number: 1
• Publication Date: November 1, 1955
• Content Type: NIE

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NIE 4 3 ? 5 5
1 November 1955
NATIONAL INTELLIGENCE ESTIMATE
NUMBER 43-55
(Supersedes ME 43-54)
THE PROSPECTS OF
THE CHINESE NATIONAL GOVERNMENT
Submitted by the
DIRECTOR OF CENTRAL INTELLIGENCE
The following intelligence organizations participated in the
preparation of this estimate: The Central Intelligence Agency,
and the intelligence organizations of the Departments of
State, the Army, the Navy, the Air Force, and The Joint Staff.
Concurred in by the
INTELLIGENCE ADVISORY COMMITTEE
on 1 November 1955. Concurring were the Special Assistant,
Intelligence, Department of State; the Assistant Chief of
Staff, 0-2, Department of the Army; the Director of Naval
Intelligence; the Director of Intelligence, USAF; and the
Deputy Director for Integigence, The Joint Staff. The Atomic
Energy Commission Representative to the IAC and the Assist-
ant Director, Federal Bureau of Investigation, abstained, the,
subject being outside of their jurisdiction.
DOCUMENT NC 1
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DATE:05D1W1 REVIEWER:
Gsiii-
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.5e416'
THE PROSPECTS OF THE CHINESE
NATIONALIST GOVERNMENT
THE PROBLEM
To estimate probable short-term developments with respect to the strength, sta-
bility, effectiveness, and policies of the Chinese Nationalist Government.
ASSUMPTIONS
1. US policy towards Taiwan remains substantially unchanged.
2. The Communists do not undertake overt military aggression in the Far East.
CONCLUSIONS
1. A return to the mainland and the pres-
ervation of its identity as the legal gov-
ernment of China will continue to be the
central objectives of the National Govern-
ment of the Republic of China and the
foci of its foreign policy. The present
Nationalist leadership almost certainly
will not agree to the creation of "two
Chinas" and will resist moves to stabilize
the Taiwan Strait situation as a trend in
this direction. (Paras. 12-15)
2. Despite slow deterioration in the in-
ternational position of the National Gov-
ernment due largely to wider internation-
al acceptance of Communist China, the
internal political situation remains sta-
ble, relatively high living standards have
been maintained and there has been some
improvement in military capabilities.
Morale has declined only slightly, and the
prospects for maintaining domestic sta-
bility over the next two or three years
appear good. (Paras. 16,19-53)
3. Over the longer run, Nationalist
China's international position and pros-
pects will probably continue to deterio-
rate. With the passage of time and in
a period of reduced tensions, the "return"
theme would be increasingly recognized
as unrealistic. Nevertheless, the Nation-
al Government would find it extremely
difficult to accept the idea that the Chi-
nese on Taiwan must resign themselves
to an insular existence. However, unless
they can make this psychological adjust-
ment and give higher priorities to domes-
tic problems, Chiang or his eventual suc-
cessor may not be able to sustain unity
and morale or to maintain the economy.
In any event, the survival and future
fortunes of the National Government will
continue to be determined in large meas-
ure by US policy, and will depend increas-
ingly upon the scale and t character of US
aid and support. (Para. 18)
4. ?Despite the gradual increases that
have taken place in the combat capabili-
""4:11111=aiiiiS
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ties of Nationalist ground, naval, and air
forces over the past several years, these
capabilities are still far outweighed by
those of Communist China. Even if Na-
tionalist military capabilities are sub-
stantially improved, outside logistic, air,
and naval support will continue to be re-
2
quired to defend Taiwan or the Penghus
against Communist invasion. National-
ist strength will continue inadequate to
defend the offshore islands against de-
termined Communist attacks. (Paras.
48, 53)
DISCUSSION
I. CHINESE NATIONALIST PROSPECTS
5. The underlying objective of Nationalist
China is to return to the mainland and re-
cover power from the Chinese Communist re-
gime. However, though continuing to call
for an early invasion, Chiang and his gov-
ernment probably consider that US support
for a return to the mainland is not likely un-
less other circumstances impel the US to en-
gage Communist China or the Communist
Bloc in a major war. Until such time as an
invasion of the mainland can be realized, the
principal objectives governing the domestic
and foreign policies of Nationalist China ap-
pear to be: to preserve its existence and its
identity as the legal government of China; to
develop an increasingly strong military force
on Taiwan as a major anti-Communist base
in the Far East; to stimulate and participate
in collective defense arrangements with other
Asian nations; and to secure increasing US
military, economic, and diplomatic support.
6. In many respects the National Government
of the Republic of China is an anomaly. Its
very existence is due to the fact that the US
defends it, provides it with economic support,
and sustains it in the world's councils. While
it continues to be acknowledged by a majority
of the states of the world as the legal govern-
ment of China, it controls only a few islands
and its international position is being eroded
by the growing power of Communist China.
Nationalist China is an armed camp, main-
taining a military establishment larger than
its economy can support, yet inadequate
either to undertake the desired invasion or to
defend the territory it now holds. The US
has not underwritten its long-range aspira-
tions and there is no visible prospect that its
hope for an early return to the mainland will
materialize. It is staunclAy anti-Communist,
yet it is an important source of dissension in
the non-Communist world.
7. During the past year, the National Govern-
ment improved its position in several respects.
The security of Taiwan and the Penghus
(Pescadores) was enhanced by the Mutual
Defense Pact with the US. Nationalist China
received large-scale deliveries of military
equipment from the US which together with
MAAG advisory assistance permitted a con-
siderable strengthening of the armed forces.
Despite large Nationalist military expendi-
tures, increased US economic assistance per-
mitted the National Government to maintain
a standard of living second only to that of
Japan in the Far East, to limit inflationary
pressures, and to support a moderate level of
capital investment. Chiang Kai-shek retained
firm control of the government and the Kuo-
mintang apparatus. Nationalist morale ap-
parently declined only slightly, and Commu-
nist activity on Taiwan appeared to be low.
8. However, in spite of these developments
the Chinese Nationalists almost certainly
recognize that their position deteriorated
during the past year. Tension in the Taiwan
Strait last winter increased world demands
for a solution of the Taiwan question and
produced strong pressures for a "two Chinas"
solution which is repugnant to both Nation-
alist and Communist China. The subsequent
Bloc campaign for relaxing tensions tended
further to erode the Chinese Nationalist posi-
tion abroad. There was a general desire in
the Free World to expand trade with Corn-
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3
munist China. Many states including Bel-
gium, France, Canada, and Italy showed an
increased interest in establishing relations
with Peiping. The British reacted with in-
creasing asperity to Nationalist interceptions
of British merchant vessels.
9. Although no country withdrew its recogni-
tion during the past year, the government
failed in its attempt to establish relations
with such nearby states as Vietnam, Laos,
and Cambodia. Despite the fact that there
was almost no change in the final voting from
previous years on Chinese Nationalist creden-
tials at the UN, it was clear that support for
Nationalist China was being given with in-
creasing reluctance and in many instances
only in response to US pressure. Support
for the Nationalist Government probably also
declined among the overseas Chinese.
10. Moreover, the talks between Chinese Com-
munist and US ambassadors at Geneva have
increased in the minds of Nationalist leaders
the fear of US recognition of Communist
China. Notwithstanding US ratification of
the Mutual Defense Treaty, the atmosphere
of detente created at Bandung and the
Geneva Summit Conference has intensified
Nationalist apprehensions over ultimate US
intentions with respect to Taiwan.
11. Finally, although the immediate threat
of Communist military action against the off-
shore islands and Taiwan appears to have
abated, the announced intention of Peiping
to extend its control over all Nationalist held
territory has not been modified. Peiping has
increased its broadcasts of propaganda ap-
peals to individuals and groups on Taiwan.
Although it has reiterated its desire to seek
a "peaceful settlement" of the Taiwan issue,
it has reserved the right to employ force in a
situation which it continues to insist is an in-
ternal Chinese affair. It has continued the
steady build-up of its military capabilities in
East China.
12. Most Nationalist leaders probably esti-
mate that even with US support, Nationalist
China's international position will continue
to deteriorate during the next few years.
They are concerned with respect to future
levels of US economic and military support.
They probably believe that present trends
will result in the eventual admission of Com-
munist China into the UN, in wider diplo-
matic recognition of Communist China, in
growing superiority of Peiping's air and naval
forces, in the reduction or elimination of trade
controls, and in extreme international pres-
sures on the US to obtain the evacuation of
the offshore islands and even a "two Chinas"
solution.
13. Despite this pessimistic outlook, Chiang
and most Nationalist leaders apparently be-
lieve that Nationalist morale and purpose can
best be sustained by pressing the objective of
return to the mainland. Nationalist leaders
have recently re-emphasized the "return"
theme in domestic propaganda. They have
reinforced the offshore islands against US
advice, and they have tended to adopt a more
stubborn and secretive attitude toward the
US while becoming more insistent in requests
for US support and aid. Nationalist leaders
apparently feel that to subordinate the objec-
tive of "return" would be the signal for a
rapid erosion of the Nationalist position as
claimant to the government of China.
14. We believe that Chiang Kai-shek will con-
tinue to give priority to the "return" objec-
tive. Even such a set-back as Communist
China's acceptance in the UN probably would
not cause him to modify this policy with its
emphasis on the military program.
15. Nationalist China's objectives in its re-
lations with the US will be to retain recogni-
tion as the legitimate government of China
and to sustain or increase the levels of US
support. Chiang will attempt to maintain a
state of tension in relations between the US
and Communist China and he may employ
his military forces in deliberate efforts to pro-
voke Communist reactions. He will almost
certainly strongly resist efforts from any
quarter to promote a cease-fire in the Taiwan
Strait or a peaceful evacuation of the off-
shore islands.
16. Assuming that Chiang continues the em-
phasis on "return" and that Peiping does not
take military action sufficient greatly to in-
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crease tensions or to involve the US, the pri-
mary problem of the National Government
will be to sustain morale and limit Communist
subversion. For the next two or three years,
however, we believe that morale will not de-
cline so far as to affect seriously the operation
of the government or the effectiveness of the
armed forces. Internal security measures will
probably be adequate to counter or suppress
Communist subversive activity. Moreover, the
present relatively high living standards will
probably be maintained, essential security
guarantees will be provided by the Mutual De-
fense Pact, and in any case the Nationalists
and Taiwanese will continue to lack practica-
ble or acceptable alternatives.
17. The problem of sustaining morale and
loyalties would be greatly increased if con-
trol of the offshore islands were lost at any
time over the next two or three years. The
situation would be critical if the loss involved
the destruction of the Nationalist garrisons.
Nationalist will and determination to continue
resistance to Communist pressures would then
depend in large degree upon US measures on
Taiwan and subsequent US actions in response
to Communist moves.
18. Over the longer run, Nationalist China's
international position and prospects will
probably continue to deteriorate. Although
with the passage of time and in a period of re-
duced tensions the "return" theme would be
increasingly recognized as unrealistic, it would
nevertheless be extremely difficult for the
Nationalist Government to accept the idea
that the Chinese on Taiwan must resign
themselves to an insular existence. However,
unless this can be done, the task of sustaining
unity and morale, and of maintaining the
economy, may exceed the determination and
skill of Chiang or his eventual successor. In
any event, the survival and future fortunes of
the National Government will continue to be
determined in large measure by US policy,
and will depend increasingly upon the scale
and character of US aid and support.
4
II. INTERNAL POLITICAL SITUATION AND
TRENDS
19. Although Nationalist China has a con-
stitution that provides for a representative
republican government, it is essentially a one-
party state; authority is centralized in the
hands of a few, and ultimate political power
resides in the hands of the leader of the
Kuomintang and head of the government,
Chiang Kai-shek. He continues to dominate
Nationalist China through his legal authority,
his prestige, and the personal loyalty of key
personages in the government.
20. The Generalissimo dominates the polit-
ical scene not so much through direct fiat as
through skillful balancing of personalities
within the government. His long-standing
practice of divide-and-rule is probably respon-
sible in large measure for Taiwan's present
degree of political stability. At the same time
Chiang's methods are largely responsible for
such continuing Nationalist short-comings
as the retention of incompetents in high posi-
tion, a general failure to delegate authority to
subordinate political and military officials,
and factionalism within the ruling circles.
21. The dominant figures below Chiang ap-
pear to be Ch'en Ch'eng, the Vice President,
and Chiang Ching-kuo, the Generalissimo's
elder son. Although the Vice President may
have improved his position recently, Chiang
Ching-kuo appears to have developed even
more strength. He has been the deputy
secretary general of the new National Defense
Council since September, 1954, and more
importantly he directs the council's National
Security Bureau ? the instrument of the
Generalissimo's control which pervades almost
every aspect of Taiwan life. Chiang Ching-
kuo exercises a large degree of influence
among all ranks of the armed forces through
the political officer system.
22. The government has shown increasing
sensitivity to the character and conduct of
its officials during the past year and several
officials have been successfully prosecuted for
corruption and malfeasance. On the other
hand, some trials have been held which ap-
pear to have been politically motivated. In
kliktidit=1
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01101KIMRT. 5
April, a former close associate of ex-Governor
K. C. Wu was arrested for allegedly harboring
a Communist agent. And in July, General
Sun Li-jen, the presidential chief of staff, was
implicated in a Communist plot. Although
officially exonerated of this charge, Sun was
found guilty on other counts. He continues
under surveillance and has no official position.
The facts of the Sun case are not clear and
may never be fully revealed. There is a sug-
gestion in the Sun case and in other episodes
of a revival of discrimination against officials
with close American associations.
23. Although there is no evidence that Com-
munist activity on Taiwan increased signif-
icantly during the past year, security meas-
ures have been tightened. These measures
may have been designed, in part, to discour-
age criticism of the regime.
24. Prospects for the further improvement of
relations between the native Taiwanese and
the Chinese from the mainland appear to be
less favorable than a year ago. International
developments have led to an increased Tai-
wanese interest in the possibilities of "two
Chinas" or of an international trusteeship
for the island. Although discussion of these
topics has not been forcibly suppressed, the
authorities have let it be known that they are
not considered suitable subjects for conver-
sation, particularly with Americans. The
Taiwanese apparently believe that their op-
portunities for participation in government
are more limited than they were a year ago.
While it is possible that Taiwanese-mainlander
relations may further deteriorate, neither
harsh Nationalist suppression or major polit-
ical concessions are likely to be required.
25. Political Trends. It is unlikely that there
will be major changes in the political scene
on Taiwan for at least the next year or that
any significant advances will be made in de-
mocratization. The maintenance of morale
will continue as a key problem for the gov-
ernment. However, even greatly lowered mo-
rale probably would not affect political sta-
bility nor significantly reduce government
effectiveness in the immediate future. The
basic objective of reconquering the mainland
will almost certainly remain paramount at
least as long as Chiang Kai-shek remains on
the scene. In consequence, domestic policies
will continue to receive subordinate attention.
A few shifts in personnel may occur in top level
positions, possibly in mid-1956 when some
military officers will be due for reassignment,
but it is unlikely that the general complexion
of the government or the party behind it will
be affected. In the event of Chiang's death
there would probably be a period of uncertain-
ty as Ch'en Ch'eng, Chiang Ching-kuo and
other leaders maneuvered for power. However,
if he were to die in the next year or two, we
believe that the leadership problem would be
resolved without serious effects on the basic
stability of the Nationalist Government.
III. ECONOMIC SITUATION
26. The economic situation on Taiwan is char-
acterized by a rapidly expanding population
and limited opportunities for increased agri-
cultural production and employment. The
population of Taiwan has increased more than
75 percent since 1940, partly because of a high
natural increase and partly because of an in-
flux of two million mainland Chinese. It now
totals over 10 million people, is expanding at
the rapid rate of about 2.5 percent per year,
and will probably reach 13 million by 1965.
27. Taiwan's economy is basically agrarian,
with about one-half of the population engaged
in agriculture. Nearly all arable land is now
tilled and 62 percent of the cultivated land
is under irrigation. Known mineral resources
are meager, although coal production meets
the island's current needs and could be ex-
panded to support a growth in industry.
Water power is abundant, and Taiwan could
expand its hydroelectric facilities consider-
ably. Some expansion in other primary in-
dustries, including fisheries, forestry, and ani-
mal husbandry, will probably occur, but Tai-
wan's over-all economic prospects will depend
chiefly on industrial development, based on
the utilization of coal and water power re-
sources, and relying on foreign trade for cer-
tain raw materials and markets.
28. Although Taiwan's productive capacity is
gradually improving, it is still inadequate to
lioNeV
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meet the demands of the expanding popula-
tion and a large defense establishment. Be-
tween 1895 and 1940 the Japanese integrated
the Taiwanese economy with that of Japan
and, through large scale investment pro-
grams, raised the productivity of the island in
selected economic sectors to a high level.
This process of economic expansion was inter-
rupted by war and postwar dislocations. Dur-
ing 1945-1949 the economic needs of the island
were in large part neglected by a government
concerned with more pressing matters on the
mainland. Since 1949, rehabilitation and ex-
pansion efforts have been greater, but it was
not until 1952 that production in agriculture
and industry passed prewar peaks. Since 1952
agricultural production has declined slightly,
but industrial production has increased near-
ly 50 percent. From 1951 to 1954, total pro-
duction increased 41 percent while per capita
output increased 27 percent. During this
same period the price level has increased more
than 40 percent.
29. Taiwan's external accounts have been
badly dislocated since the end of World War
II. The prewar levels of sugar and rice ex-
ports have been reduced owing to the growing
food requirements of the expanding popula-
tion. This decline in exports, together with
the demands of the large defense establish-
ment, have prevented Taiwan from financing
with its own resources the imports of goods
and services required to maintain an expand-
ing economy. The Nationalists have been
able to acquire necessary imports only be-
cause of US economic assistance totaling
about $500 million since 1950. During 1954
a foreign exchange crisis developed, as exports
declined sharply following a reduced sugar
crop while imports were maintained through
drawing down official foreign exchange re-
serves. The situation eased somewhat in 1955
with the recovery of exports, the imposition
of stricter controls over imports, and the allo-
cation of additional US economic aid.
ECONOMIC INDICATORS
Agricultural
production
(1938 = 100)
Industrial
production
(1941 = 100)
1951
1952
1953
1954
1955
1956
83
92
101
111
98
140
97
152
96a
158b
GNP (millions of
1954 dollars)
1,050
1,235
1,345
1,480
na
Per capita GNP
(1954 dollars)
115
130
136
146
na
Wholesale prices
(1952 = 100)
82
100
109
111
123c
Exports
(million dollars)
93
120
130
98
na
Imports
(million dollars)
151
222
199
- 205
na
Balance of payments
(current account of
goods and services)
(million dollars)
-61
-99
-80
-125
na
Budget deficit d
(exclusive of US
counterpart)
(million dollars)
na
-46.1
-52.1
-55.3
-68.0
-120e
ICA Counterpart
(million dollars)
na
38.6
50.9
53.0
67.0
na
a Preliminary estimate
b Jan-Mar, seasonally adjusted
c For July, 1955
d 1952 and 1953 figures are for fiscal year ending Dec 31; later figures are for fiscal year ending June 30.
e Planned
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30. The financial difficulties of the National
Government were intensified this year by
sharply rising military expenditures and by
the costs of resettling discharged servicemen
and Tachen Island refugees. The government
has refused to raise taxes, apparently because
of fear of alienating the population. Al-
though budget deficits have in the past been
covered by counterpart funds, these deficits
are constantly rising and the planned $120
million deficit for fiscal 1956 is nearly double
that of 1955. Thus far, Chinese officials have
ignored US fiscal advice, apparently in the ex-
pectation that deteriorating economic condi-
tions will force the US to extend greater eco-
nomic aid to the country.
31. The economic policies of the Nationalists
reflect their concentration on the objective of
an early return to the mainland. In the allo-
cation of economic resources, first priority is
given to the build-up of military strength and
second priority to the maintenance of current
living standards. Long range economic de-
velopment receives a lower priority. Gross in-
vestment, currently about 10 percent of total
output, covers capital replacement needs and
provides new capital adequate to support pos-
sibly a two to three percent annual increase
in GNP. This level of investment, taken in
conjunction with the rapid population growth,
provides little if any increase in per capita
GNP.
32. Economic Prospects. Over the next few
years production will probably expand at a
rate somewhat above that of the population
growth due in part to expected increases in
industrial production resulting from recently
enlarged electric power facilities. The gov-
ernment, however, will probably continue to
allocate these increases in output to military
expansion and to sOcial welfare, subordinating
the long-term investment needs of the econ-
omy. We believe it unlikely, therefore, that
the economy will expand sufficiently over the
next few years to reduce the dependence of
the National Government upon US aid assum-
ing that military expenditures remain at ap-
proximately present levels.
33. In the long run, there will be a deteriora-
tion in the Taiwan economic situation unless
7
the government changes its policies. Current
high population growth rates, together with
limited prospects for agricultural expansion,
indicate that economic development, if it is
to maintain per capita productivity and living
standards, must provide in the coming decade
for a population which will be 30 percent
larger and substantially more urban and in-
dustrialized than at present. However, the
major adjustments required by these develop-
ments are not likely to be efficiently imple-
mented without a leadership strongly com-
mitted to economic growth and a level of gross
investment substantially above the present
rate.
IV. RECENT MILITARY DEVELOPMENTS AND
PROBABLE TRENDS
34. Army. The Nationalist ground forces of
325,000 men are organized into 2 field armies,
7 corps headquarters, 21 infantry divisions,
2 light armored divisions, and some miscel-
laneous units. They are disposed as follows:
General Headquarters, Army and Taiwan
Defense Command
GHQ, army and service troops, 1 air-
borne infantry regiment, armored
force, training units, and service
schools 34,000
First Army Area (Northern Taiwan)
3 corps headquarters
6 infantry divisions 87,000
Second Army Area (Southern Tai-
wan)
3 corps headquarters
6 infantry divisions 83,000
Eastern Garrison Command (Eastern
Coast of Taiwan)
1 reconnaissance regiment
miscellaneous units 4,000
Taipei Garrison Command
1 infantry division 9,000
Penghus (Pescadores) Defense Corn-
mand
1 infantry division 13,000
Total on Taiwan and Penghus
Matsu Defense Command
1 infantry division
miscellaneous units
Chinmen (Quemoy) Defense Cam-
mand
1 corps headquarters
6 infantry divisions
SECRET
230,000
19,000
76,000
Total Ground Forces 325,000
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35. The army's effectiveness is impaired by a
failure of the highest command echelons to
delegate authority and by a political officer
system which interferes with command func-
tions. MAAG is attempting to overcome these
problems through instruction in US military
staff methods, through recommended changes
in army organization and through new agree-
ments designed to modify the functions and
operations of the political officers. MAAG's
advice is often ignored. In particular, Chiang
is adamant in his belief that the political offi-
cer system is essential to maintain morale,
loyalty, and discipline in the armed service.
36. The newly organized army logistical com-
mand is improving supply and distribution,
which have been glaring weaknesses in the
army, and for the first time gives the army
command effective control of its own technical
services. However, maintenance of equipment
is still unsatisfactory at all levels above that
of the individual soldier.
37. The army lacks a rational system for the
accounting and utilization of personnel. The
insistence by MAAG that all army units sup-
ported by the US be brought to full strength
has been ignored. Although there is tenta-
tive agreement that ineffectives in the army
must be discharged and that a reserve train-
ing program must be developed to provide the
needed "young blood" in the army, the im-
plementation of these programs has so far
been ineffective.
38. The morale of officers and enlisted men
at the present time is not believed to be a
limiting factor in the army's combat capabili-
ties. The over-all morale rating for the army
is satisfactory to good, with the morale of the
garrisons on the offshore islands being higher
than that of the units on Taiwan. The
morale of junior officers is impaired by the
incompetence of some senior commanders in
the army and some officials in the Ministry of
National Defense. The morale of the Tai-
wanese who have been taken into the army,
including those sent to the offshore islands,
appears to be good. ?The Taiwanese recruits
have been fairly treated.
39. The army has now developed a sound de-
fense concept and improved plans for the de-
fense of Taiwan. Realistic plans for the de-
fense of the offshore islands are being devel-
oped. Nationalist troops are well-equipped
with small arms and crew-served weapons,
and are capable of using them effectively.
Although combat capabilities have improved
and units up to and including regimental size
are generally well organized and trained, only
a few units have received training at division
level.
40. Navy. The Nationalist navy can no longer
be considered superior in number and type
of ships to the Chinese Communist navy,
which was recently strengthened by the trans-
fer of additional Soviet long-range submarines
and destroyer types.
41. The personnel strength of the Nationalist
naval establishment totals about 53,800 in-
cluding about 23,500 marines organized in
1 division, 1 brigade, and 2 amphibious bat-
talions. The navy includes 3 destroyers, 5
destroyer escorts, and 34 other patrol-type
craft, 11 mine vessels, 34 amphibious vessels,
15 auxiliaries, and 66 service craft. There is
no naval air arm.
42. The navy and Ministry of National De-
fense continue reluctant to accept risks in
naval operations. Routine shipboard main-
tenance programs are poorly executed and
regularly scheduled overhauls are not ad-
hered to, thus leaving ships in an "upkeep and
repair" status for relatively long periods. Al-
though the importance of practical training,
particularly underway training, has long been
ignored, comprehension of the need for such
training is now becoming evident at all levels
of command. Antiaircraft, antisubmarine,
and shore bombardment capabilities are fair;
however, the navy requires further training
before it could satisfactorily participate in
either joint or combined operations. The ex-
pansion of the marine corps, including the
addition of one former army division, has
slowed considerably its development as an
amphibiou?' assault force; one brigade, how-
ever, is considered suitable for use as assault
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#.45.EsiloPMek
troops. Relations between the navy section,
MAAG, and the Nationalist navy appear to be
good, and continued MAAG training and con-
tinued receipt of MDAP material should re-
sult in improvement in naval effectiveness.
43. The morale of the Nationalist navy is low.
During the past year the navy has lost several
ships to Communist planes and torpedo boats
and has won no corresponding victories over
the enemy. There is a lack of authority on all
levels to carry out the prescribed functions
and responsibilities. Even the navy com-
mander cannot effectively reprimand or dis-
miss an officer who fails in his duties. There
is constant and arbitrary interference by po-
litical officers, and personnel policies have re-
sulted in the promotion of incompetents and
the frequent by-passing of the chain of com-
mand.
44. Air Force. The personnel strength of the
Nationalist air force is about 70,000, including
about 1,900 pilots of whom 500 are in training.
Also included are 27,500 AAA and other army
troops under the operational command of the
air force. There are about 750 aircraft, of
which about 435 are assigned to units. The
Nationalists have about 70 F86F jet fighters
and about 145 F84F fighter bombers. Pilot
training programs for these types appear to
be keeping pace with aircraft delivery. The
aircraft are currently organized into eight and
two-thirds groups: 5 fighter groups, 1 troop
carrier group, 1 light bomber-patrol group,
1 transport group, 1 tactical reconnaissance
squadron, and 1 air-sea rescue squadron.
45. Air facilities include 21 operational air-
fields and one seaplane station. All are on
Taiwan with the exception of one field on
Chinmen and one in the Penghus. Five of the
Taiwan fields provide the principal current
capability for supporting air combat opera-
tions, although two more are now suitable for
limited jet fighter operations and are sched-
uled for further improvement. The air facili-
ties system is generally sufficient for present
requirements, but is still inadequate for in-
tensive combat operations. Longer runways,
large capacity fuel storage facilities, fuel pipe-
9
lines, and other support facilities are current-
ly being constructed. When present and
planned construction is completed, air facili-
ties will be capable of supporting any opera-
tions of the Nationalist air force as presently
constituted.
46. Although the Nationalist air force is
stronger than that of any non-Communist
East Asian country, it is far weaker than the
Chinese Communist air force. However, its
fully trained jet-equipped units are believed
to be equal to those of the Communists on a
unit-for-unit basis. The fighter units have
the capability of providing effective close sup-
port of ground operations, and photo recon-
naissance capability is excellent.
47. The capability of the air force to provide
air defense remains weak in Taiwan and even
weaker in the offshore islands. The chief de-
ficiencies at present are the limited effective-
ness of the early warning and GCI systems
and the low operational readiness of some of
the available intercept squadrons. Antiair-
craft artillery defenses are inadequate with
respect to types and quantity of equipment as
well as to the state of training of personnel.
48. Over-all Military Capabilities. Despite
the gradual increases that have taken place in
the combat capabilities of Nationalist ground,
naval, and air forces over the past several
years, these capabilities are still far out-
weighed by those of Communist China. With-
out an assured resupply of ships and aircraft
the Nationalists probably could not supply the
offshore islands in the face of sustained in-
terdiction efforts by the Communists. The
Nationalists could make difficult and costly
any Communist assault on the offshore is-
lands; they could not hold the islands- if the
Communists are willing to pay the price in
men and material. Without outside logis-
tical, air, and naval support the Nationalists
are not capable of sustained defense of Tai-
wan against determined Communist attacks.
49. The Nationalists presently have the capa-
bility to restrict ship movements in the Tai-
wan Strait and adjacent areas; commit air-
craft to bombardment, amphibious support,
00106Plivaia
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10
airlift and paradrop missions; conduct guer-
rilla raids, and raids with regular troops in
regimental strength against the coastal prov-
inces. Although navy antisubmarine and
mining capabilities are fair to good, the air
force has no capabilities in these two fields.
50. Probable Military Trends. Several seri-
ous deficiencies will continue to limit the ef-
fectiveness of the, Nationalist armed forces
during the next few years. The Nationalists
are unlikely to make significant changes in
the present method of senior officers' appoint-
ments, to improve leadership and initiative in
command positions, or to modify the political
officer system.
51. The age-sex distribution of the Taiwan
population indicates that there should be an
adequate number of physically fit males in
the 18 to 25 year age group on Taiwan
to maintain the armed forces at present
strengths over the next decade. If age and
physical requirements were changed, it is
possible that as many as one million men
could be mobilized. Taiwanese presently con-
stitute about 20 percent of the army, and this
ratio may reach 50 percent by 1965. At pre-
sent, they are used mainly as infantry re-
placements, but in time they will begin to fill
junior officer ranks and may eventually gain
important command positions.
52. Present plans call for the air force to have
three full fighter groups (nine squadrons)
equipped with F-86 aircraft by mid-1958 at
which time the personnel of all units should
be at a high degree of readiness and training.
However, all piston aircraft will have become
virtually unflyable and the- F-84 jets will be
obsolescent.
53. Even if Nationalist military capabilities
are substantially improved, outside logistic,
air, and naval support.will continue to be re-
quired to defend Taiwan or the Penghus
against Communist invasion. Nationalist
strength will continue inadequate to defend
the offshore islands against determined Com-
munist attacks. Although the Nationalists
will probably develop the capability to con-
duct division-size raids against the mainland
within the next year or so, any invasion effort
would require substantial outside logistic, air,
and naval support.
cz@EINPr
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28
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SECRET ?
112 116 120 124 128\
25052 10-55
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