POSITION PAPER ASSUMPTION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP61-00549R000200030040-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 15
• Document Creation Date: December 9, 2016
• Document Release Date: March 26, 1999
• Sequence Number: 40
• Content Type: PAPER

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Position Pa,er
Assumption
For the purposes of this paper "A change of status for Formosa"
means a change in international status of any kind short of
incorporation into the Chinese People's Republic. It does not
cover purely internal changes, e.g. of personalities or in the
character of the Government, which would fall under the heading
of a weakening of the Chinese Nationalist position.
(a) Probable Chinese Communist intentions and actions in
affected by the weakening of the Chinese Nationalist
position or a change of status for Ptrmo7sa7
We believe that Chinese long-term aims in the area are: -.
(a) to dominate the Far East and to remove Western influence;
(b) to establish Communist or pro-Communist Governments in the
other countries of the area, and
(c) to regain control of certain areas which they regard as
Chinese territory - the offshore islands, Formosa,, Macao,
Hong Kong and parts of Burma.
Timing
2. It is unlikely that the Chinese have any fixed time-table
for achieving these objectives. They appear to be confident that
the Sino-Soviet cause is triumphing over the Western and no doubt
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reckon that with their own growing strength time is on their side*
3. The means that the Chinese will choose for pursuing these
aims will vary according to political and economic factors at any
given time in China and in the other territories in the area; to
their assessmerLL of Western policies and reactions, and to world
tactics as agreed from time.to time with the Soviet Union.
4. To regain control of those territories which they regard as
their own, and which, therefore, have a nationalist importance
far beyond their intrinsic value, Chinese plans no doubt include
the use of threat of force, as at present over the offshore
islands. But it is unlikely that they (and even less the Soviet
Union) will wish to precipitate a global war over any of them,
and they will rather try to regain them either, in certain
circumstances, by a rapid local operation, or by a combination of
threats, subversion and diplomatic moans. Equally they may hope
for a breakdown of the administration in any of these places
which would enable them to assert control more or less peaceably.
5* The offshore islands have been chosen as the first on the
list, but without, it seems, any fixed timetable for their
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recovery, and Chinese statements during the present crisis have
implied that they are prepared to wait for Formosa for some time
(a figure of five years has been mentioned). The same is almost
certainly true for the other territories mentioned in paragraph
1 (c) above, for which they may well be prepared to wait even
longer. At the same time they will lose no opportunity of
embarrassing t',e West, exploiting differences between the United
States and its allies, and building up Afro Asian sympathy for
their irredontist claims. They might thus provoke a series of
crises, each contrived to produce some concession and some
disarray among the Western powers, designed to force a with-
drawal by stages. In Korea the basic Chinese aim must be to
ensure that the Peninsula is not dominated by a hostile Power.
As the price of withdrawal of United States forces the C.P.G.
might eventually be prepared, provided that it could not be
represented as a diplomatic defeat,# to accept a settlement more
or less on Western terms.
6. Chinese aims in the rest of the area are in a different
category from those in the territories which they consider as part
of the motherland and, provided that the Western powers maintain
and adequate deterrent to military action and make it clear where
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they will "hold the ring", will probably be pursued by less
direct means. All the non-Communist countries in the area are
nationalist, most are anti-colonialist and some are neutralists
They are, therefore, vulnerable to Communist attempts to discredit
Western motives, and to exploit feelings of nationalism as well
as the common bond between peoples who have recently become inde-
pendent. In ar.dition their social and economic problems, political
immaturity, military weakness and the consequent fear of anta-
gonising Communist China, with, in the case of certain of them,
their admiration for Chinese Communist achievements, all make
them susceptible to Communist influence,
7. In these circumstances there are considerable advantages to
China in presenting herself as an essentially reasonable and peace-
loving country deprived of her rights by Western intransigence.
There is some evidence, it is true, that neutral Asian opinion
counts for less in China's calculations than it did in the two
years following the Bandung Conference and that the Chinese GQVern-
ment expects unqualified support for its present demands in return
for the support given in the past to the Governments of Egypt,
Syria, Indonesia and Cambodia. Nevertheless,, it is unlikely that
the Chinese Government will wish to antagonize other members of
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the Afro-Asian bloc, particularly India, by embarking on military
adventures in South-East Asia. There seems, moreover, no economic
reason for Chinese territorial expansion in the foreseeable future.
Indeed, the country requires a long period of peace in which the
internal economy can be consolidated. For all these reasons it is
unlikely that the Chinese will pursue their aims in these countries
by military mea:is. They will rather seek to extend their influence
by propaganda, subversion, and economic penetration conducted in
such a way as to avoid as 'ar as possible rousing Asian, and in
particular Indian, suspicions.
Effect of a weakening of the Chinese Nationalist position or of
a chap. C .o of status for Formosa
8. A weakening of the Chinese Nationalist position might affect
the timing but not the intentions of the Chinese People's Govern-
ment either towards Formosa itself or the rest of Asia*
reasons outlined above it is unlikely that they would seek to
press on with increased military action. They would, however,,
urge on the Nationalists, and particularly on non-ChianCKai-shek
elements, the conclusion that it was useless in the long run to
rely on the United States, and would exert greater pressure on
them to come to terms as brother Chinese. It is quite possible
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that they would confine themselves for a year or so, or until the
disappearance of Chiang Kai-shek, merely to a propaganda campaign
on these lines combined with one throughout the area directed
against American military bases and military aid.
9. A change in the status of Formosa might have the advantage
for the Chinese People's Government of facilitating their admission
to the United Nations,, as well, presumably, as lessening direct
United States influence over the island. They might calculate
that, as there is little prospect of the United States handing
over Formosa direct to the Chinese People's Republic, some pro-
visional status might prepare the way for an eventual settlement
acceptable to them, with face saved all round? In these circum-
stances the Chinese might tacitly accept a different status for
Formosa in exchange for the Chinese seat in the United Nations and
a guarantee of later negotiations about the island's future. At
the same time they would have to consider the risk that any change
in the island's status might make its ultimate incorporation into
China more difficult - for instance in the event of a plebiscite
in which the people of the island might opt for independence. If
this were their assessment, they might seek, e.g. in the United
Nations through the Soviet Union and Afro-Asians, to block any
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moves towards a change of status; or1, if this looked like coming
about despite their opposition' they might feel that they must press
matters to a conclusion before any new regime had time to take root.
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(b) The effect oany such develooments u Don other
Dover i s in the area (in particular those at present
more c oselly a i ed with the West : and onthe r
asse"-- sent of estern determination to resist Communist
encroachment.
1. The Governments most immediately affected would be those of
the two half states, South Korea and South Vietnam, which are
bitterly opposed to the Chinese Communists, hope eventually to
redeem the lost half of the national territory, and are almost
entirely dependent on the United States for their protection.
These in fact must see a parallel between Formosa and their own
case. In both there would be alarm, and distrust of United States
determination to resist Communist encroachment (both Governments
might however be tempted to express greater dismay than they really
felt so as to heighten Western anxiety to conciliate them). It is
however unlikely that there would be any disposition to come to
terms with the Communists. A change of statue for Forraoca, if it
represented an evident defeat for the West, would be more damaging,
though. it would still be unlikely to lead to reinsurance with the
Chinese People's Government. If it were a reasonable settlement
reasonably negotiated it might be more acceptable, though
misgivings would remain.
2. Next come those countries - Thailand,, the Philippines, Pakistan,
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and Malaya - in defence treaty relationships with the West,, which
they consider at present to be their best protection against Sino-
Soviet penetration. The Thai. Government, though they have little
feeling of solidarity with the Nationalist regime as such, regard
the present offshore islands dispute as a test of whether or not
the United States are really prepared to contain Communist China.
A weakening of the Nationalist position would cause the Thai
Government to review the extent of their commitment to SEATO, and
perhaps, if the circumstances were such as to suggest that the
Nationalists had been unreasonably let down, to reduce their support
of Western policies to the minimum required to prevent a sudden
cut-off of United States aid. A change of status for Formosa, if
brought about by negotiation, would be greeted at first with
considerable relief, since it would accord with the Thai's basic
instinct to disengage from any awkward situation. In the longer
term it would strengthen the demand for an accommodation with
Communist China, particularly in view of the presence of some
three million economically powerful Overseas Chinese.
3. The people of the Philippines detest the Chinese and
Communism almost equally, and, although American prestige would
to some extent be damaged by a weakening of the Nationalist position,
there is no great danger of the Philippine Governmentfs turning
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towards neutralism. They would welcome any solution to the
question of the offshore islands, whose continued retention they
regard as a military and political liability, which would bring
about a peaceful Nationalist withdrawal. A change of status in
Formosa, provided that this did not entail, handing it over to
Communist China, would not lead to any readjustment of policy.
Only if Formosa ,,-.re united with mainland China would the Philippine
Government probably fool impelled to recognize Poking; and to
moderate its persecution of the Overseas Chinese, who are at
present effectively controlled by the Chinese Nationalist Embassy.
I, Pakistan is far removed from the area of the dispute, and is
likely to be so preoccupied with internal affairs that she will
tend to treat the problem largely in the light of her own domestic
considerations. President indications arc that the now Governmont
will be more, rather than less, closely aligned with the West
and, provided that any weakening or change of status for Formosa
took place without undue loss of face to the West, we should not
expect the effect in Pakistan to be serious.
5. Although much would depend on the way in which it took
place,, a Nationalist reverse would increase Peking's influence
over the Chinese community in Malaya. To that extent it would
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entensify the Chinese expansionist and subversive threat. K.M.T.
influence in Malaya is slight and dwindling; and Peking's influence
is already the main threat. Provided that a Nationalist setback
did not involve United States prestige too closely, nor cast serious
doubt of the readiness on the United States to defend other posi-
tions in the Far East, local confidence in the West would probably
not be seriousi' shaken. A negotiated provisional status for
Formosa would probably be welcomed,, as removing a perennial source
of international tension.
6. In the neutralist states (India, Indonesia, Burma and Ceylon)
the existence of the Nationalist regime is considered by many to
constitute a threat to peace. Although the Governments of these
countries adhere in public to the thesis that Western defense
measures in the Far East and South East Asia are provocative and
unnecessary, some, at least, have private apprehensions about
Chinese ambitions and might well be alarmed at any developments
which seemed to represent a spectacular victory for the Chinese
People's Republic. If. however,, the situation were adjusted on
reasonable terms, they would be relieved at the elimination of a
point of friction. In Singapore local supporters of Peking
would be encouraged by any weakening of the Nationalists,, and this
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might lead in the long run to an increasing desire to reinsure with
the Chinese Communists (but see section (c) below).
7, In general, if any changes in the situation appeared to be a
series of defeats for, or a continued retreat by, the West, this
would have serious repercussions throughout the area. If, however,
the outcome appeared as a rational consolidation of the Western
position, and it was made clear that Western determination to
contain Communist China and to combat political and economic sub-
version in the rest of the area was not impaired, this need not
undermine Asian confidence in the West, and indeed might well have
a stablizing effect?
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SECRET
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Position Paper
(c) Repercussions on Overseas Chinese Communities in South
asAsia of any_chnge National status and influence
1. The Chinese in Hong-Kong are not included in the term "Overseas
Chinese" as used in this paper.
(a) In general the majority of Overseas Chinese are non-
political, although in certain territories this may be changing
with the rise of a younger generation more politically conscious.
In airy event, the primary factor controlling the political behaviour
of Overseas Chinese is their own self-interest - i.e., they will
be affected less by the fate of the Nationalists than by their
estimate of the intentions and capabilities of the Governments of
the countries in which they live, and of the Western Powers'
determination to help those countries and contain Communist China.
Nevertheless, a decline in Nationalist influence, whatever the
circumstances, would no doubt swing more individuals towards
positive - sympathy with Peking.
(b) On the whole, Nationalist influence among Overseas
Chinese has steadily declined. Any attempt to rebuild it is
unlikely to be successful and,, to the extent that it were, there
would be a greater likelihood, should the Nationalists' status be
further weakened, of those Overseas Chinese who had been encouraged
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SECRET
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SECRET
to look towards Nationalist China simply transferring their
allegiance to Peking.
(c) As the power of the Peking Government increases so
inevitably will its influence with Overseas Chinese, whatever
policy is adopted towards them. The best counter seems to be to
encourage them t., identify themselves with the countries where
they live. The type and degree of "assimilation" which it may
be possible to achieve, as well as methods, will vary according
to the circumstances in each territory. At best the Chinese sense
of racial identity will always be an important limiting factor,
3e The progressive communisation of China, as represented, for
example, by the recent development of "communes", will increase
the difference between the way of life of the Overseas Chinese
and that of Chinese in China,, and, if this can be brought home
to the former, could help any process of assimilation.
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