Taipei, 14 November 1967
Secret Guard
Relations with the Republic of China
I have the honour to review the state of our relations with the Republic of China since the establishment of an Australian Embassy in Taipei in September, 1966.
2. The establishment of the Embassy probably gave rise to expectations on both sides that it would lead to and promote a closer relationship between Taipei and Canberra. As I shall endeavour to show, this has not happened. On the contrary, there has been during the past twelve months some discernable strains in our relations with the R.O.C. despite the maintenance of a superficial cordiality at all official levels. Given the nature of the factors affecting our relationship this was perhaps inevitable, and I think it would be a mistake to take too tragic a view of it. Nevertheless, more by accident than design, a number of factors have combined to produce a noticeable cooling off in the Embassy’s relations with the G.R.C. as compared with the first flush of enthusiasm which greeted our arrival.
3. In my Despatch No. 21 I suggested that our decision to recognise Outer Mongolia marked the end of the ‘honeymoon’ period which obtained during the first few months following the establishment of the Embassy. Not even the Prime Minister’s visit in April of this year, and the undoubted goodwill which it generated, was sufficient to overcome the very real difficulties in the way of entering into a closer relationship with this country. As I have previously pointed out, there are good reasons for this. Superficially, our two countries have much in common, but there is a fundamental divergence of view in our respective attitudes towards Communist China which no amount of cordiality can entirely hide. It is, for example, almost impossible to carry on a meaningful dialogue with Chinese officials except on such ’safe’ subjects as U.N. representation, regional co-operation, trade and the like. Once the subject turns to what is uppermost in most local officials’ minds, namely the situation in mainland China, and what to do about it, one is inevitably subjected to Nationalist propaganda about the imminent collapse of the Maoist regime and the prospects for ‘mainland recovery’. Rejecting any possibility of a two Chinas solution, the G.R.C. does not take too kindly to anyone who even hints at such heresy. By the same token, any discussion of the domestic political scene on Taiwan with Government officials which is not predicated on the island’s ‘provincial’ status, is likely to get the foreign observer into hot water. Thus the most critical questions concerning Taiwan and its future are largely taboo as topics of conversation with Chinese officials, unless one is prepared to accept the Nationalist thesis without question. Since the Australian Government does not subscribe to the view that the only solution to the Chinese problem is the overthrow of the Peking regime by force, there is a certain brittleness in our relations with the R.O.C. which is unlikely to improve with time. On the contrary, recent events and such predictions as one can make as to how the situation is likely to develop, suggest just the opposite.
4. As to recent events, I have already referred to our decision last February to recognise Outer Mongolia. This came as a considerable shock to the R.O.C., and revealed us as a country which was certainly not ‘all the way with the K.M.T.’. No doubt the Prime Minister’s visit did much to reassure the G.R.C. that our views on Mongolia did not mean that Australia was wavering in its general support for the R.O.C., although the basic principles of our China policy (as set out in your statement to the House on 18th August, 1966)2 clearly defined the limits of that support. More recently, there has been the Prime Minister’s statement in his television interview last July when Mr Holt held out the possibility, in certain circumstances, of our being willing to consider the recognition of Communist China.3 Needless to say, no hint of the Prime Minister’s remarks reached the Taipei press, although we can be sure that they were duly noted by the G.R.C. Indeed, Foreign Minister Wei specifically asked me whether the Prime Minister’s television interview had been correctly reported in the foreign press and indicated that he had asked his Ambassador in Canberra to confirm the accuracy of the statement. (At the time I explained that this represented no new departure in Australian foreign policy; that in our view the existence of mainland China could not be ignored, and that an eventual accommodation with mainland China was basic to our thinking on the China question.) It was about this time that a certain coolness could be detected in the Embassy’s relations with Chinese officialdom, and the Foreign Ministry became noticeably indifferent to our accommodation problems, some of which are still unresolved. It is also interesting to note that despite the strong support here for the allied effort in Vietnam, nearly all social invitations issued by the Embassy to senior military officers have either been declined or ignored. So far as the military are concerned, in my report on the Prime Minister’s visit4 I alluded to the fact that the visit was boycotted by the Minister of Defence (Chiang Chingkuo) who did not appear at any official functions, notwithstanding that the Chinese virtually insisted on giving Mr Holt a briefing in the Defence Ministry!
5. On the economic side, the Managing Director of B.H.P., Sir Ian McLennan, visited Taiwan in May to examine the prospects for associating B.H.P. with Japanese and local interests in the establishment of an integrated steel mill. The subsequent visit in July of a team of B.H.P. experts gave rise to exaggerated hopes that Australian participation (involving an investment of approximately US$10 million) was almost assured, although I was at the time concerned to point our that such hopes were premature. B.H.P.’s subsequent decision not to invest in the project was no doubt a severe blow to the Ministry of Economic Affairs and to Minister K.T. Li personally, whose political future may depend on the successful outcome of the steel mill project. I have it on good authority that the President is particularly anxious to secure at least a token Australian investment in Taiwan’s steel industry, partly for prestige reasons, and also to help counter the danger of the steel industry becoming largely a Japanese undertaking. Although B.H.P.’s decision was taken for valid economic reasons, there is no doubt that it was received here with a certain sense of disillusionment on the part of those most concerned, who probably saw our decision as at least partly influenced by political considerations.
6. More recently still, to the adverse effect on our mutual relations of the steel decision, has been added the complaints of Australian exporters at their failure to secure payment for goods supplied to various Chinese firms who, for one reason or another, have not honoured their contracts. In one case the debt goes back several years, and in another there is an amount of over A$300,000 outstanding for wool shipments going back to September, 1966. My representations on behalf of these firms have not been received as sympathetically as we are entitled to expect, and my relations with the Ministers and officials concerned have tended to suffer accordingly. There has been a curious reluctance on the part of the Chinese even to discuss such painful subjects, and a suggestion that what happens between private traders is no concern of Governments. Even allowing for the fact that some loss of face is involved in being confronted with breaches of contract on the part of Chinese traders, some officials appear to be quite unconcerned by the paradoxical situation in which both countries are sponsoring official trade missions at the time when some Chinese importers are being threatened with legal action by their Australian suppliers! Thus, even our trade relations with the R.O.C. are complicated by the doubtful business ethics of some Chinese traders. (The contrast between this aspect of our trade with the R.O.C. and the scrupulously prompt payments which are a feature of our trade with mainland China appears to be lost on officials in Taipei.)
7. One of the inducements held out to us to establish a Mission here was that it would facilitate and increase our access to intelligence about the situation in mainland China. Unfortunately, this has not proved to be the case. It has proved impossible to enter into a meaningful dialogue with intelligence officers about the mainland situation, and such information as has been provided has on examination been found to be out of date, highly tendentious and of doubtful value. There has, moreover, been no disposition to discuss the intelligence provided—on the contrary, officials have seemed afraid to add anything to what has been released to us in written form. Thus, in the intelligence field also, our relations have remained at a very superficial level and have in fact deteriorated since my initial call on the Head of the National Security Bureau5 and his staff, when it was assumed by the Chinese that we envisaged a full exchange of intelligence.
8. The latest ‘unfriendly’ act on our part (which incidentally provides a good example of the G.R.C.’s need for continual reassurance of the support of its friends) was the fact that we did not send a congratulatory message on the occasion of the ‘Double Tenth’6 which, as you know, prompted the Chinese Ambassador in Canberra to solicit one even ten days after the event! No doubt our response to an alternative request for a message to mark the President’s eightieth birthday was received with satisfaction. (I suspect that the President himself was unaware that the message was not entirely ’spontaneous’. The Ambassador’s action was probably prompted by the consideration that the absence of such overt gestures of support for the R.O.C. is often attributed in Taipei to lack of diligence on the part of the Chinese diplomatic representative in the country concerned.) Our own essentially pragmatic approach to these largely meaningless gestures, and our ‘failure’ to rise to the occasion on the ‘Double Tenth’, (notwithstanding the personal felicitations offered to the President by my wife and myself), was probably interpreted here as yet another example in recent months of Australia’s ‘disinterest’. Obviously we never make the kind of statements that G.R.C. officials find so comforting. By contrast, a senior American military commander recently publicly described the R.O.C. as, inter alia, ‘a showcase for democracy’ (which it most certainly is not). Indeed, the emotional attachment of some senior U.S. officials here to the R.O.C. goes quite deep, and one cannot help wondering about the effect of this on their reports to Washington. Then, of course, there are the sycophants in the Diplomatic Corps such as the Spaniard, some Latin Americans, and one or two Africans, who publicly laud the R.O.C. as the repository of all virtue. By comparison with these stalwarts, Australia’s guarded support and muted praise sounds pretty wishy-washy in local ears.
9. The events of the past year have therefore combined to produce some discernible strains in our (superficially cordial) relations with the R.O.C. and these strains are likely to continue. Even in fields where our relations would seem to be firmly based, such as our support for the R.O.C.’s position in the U.N., and our growing trade relations, there are potential causes of friction. For example, any sign of flexibility from Peking would no doubt evoke a response from the West and this would have repercussions in the U.N. as elsewhere, and make it unlikely that Australia could continue to support without reservation Taipei’s present uncompromising stand. With respect to our trade relations, the prospect is for a growing imbalance in Australia’s favour, and this at a time when, like many other less developed countries, Taiwan is likely to experience increasing difficulty in finding adequate markets for her relatively limited range of exports.
10. As to the situation on the mainland, if one is disposed to dispute the Nationalist thesis that Communism in China is virtually finished, and to believe that the forces of revisionism in Communist China might eventually triumph as they have in Russia, it is possible to argue that there is a prospect of a gradual return to normality in China’s relations with the outside world. If this should happen, the current improvement in Taipei’s international position as a result of the excesses of Maoism might prove to be relatively short lived. In these circumstances, and as the dream of mainland recovery fades, Taipei will have to decide whether to seek to maintain Taiwan’s right to an independent existence or to contemplate an accommodation with Peking. President Chiang’s reference in his ‘Double Tenth’ message to his willingness to work with all anti-Maoists, including such people as Liu Shao-chi7 and Teng Hsiao-ping,8 suggests that he is prepared to pay a high price for Chinese unity. Moreover, to the extent that only the Taiwanese are interested in Taiwan’s independence from China, it is difficult to conceive of any Chinese Government (Nationalist or Communist) ever agreeing to a two Chinas solution except under duress. To many Nationalists, including the President and his closest advisers, their eighteen year old exile on Taiwan represents ‘the most humiliating period in Chinese history’, and the mere perpetuation of the status quo holds little attraction for at least the old guard of the K.M. T. who still determine Nationalist policy. On the other hand, whatever disposition there may be in Taipei to reach an accommodation with Peking at some future time, no Communist mainland regime would be likely to respond to Nationalist overtures, and mere survival may oblige the R.O.C. to accept a drastically reduced international role. In any event, it seems unlikely that Taipei can maintain its present posture indefinitely, and the process of adjustment to the abandonment of cherished positions is likely to be very painful. Meanwhile, as Taipei’s international position weakens, R.O.C.–Australian relations are likely to be subjected to increasing strains as it becomes more and more difficult to reconcile our wider political interests in Asia with the relatively narrow and potentially dangerous aims of Nationalist policy.
[NAA: A1838, 519/3/1, ix]
1 Document 120.
2 Hasluck stressed both the reality of the PRC’s existence and Australia’s support for the ROC. In his introduction, he remarked that the ‘great question’ facing Australia and other nations in the region was how to live with Communist China. He underlined the idea that China could not be ignored or destroyed; a way had to be found of co-existing peacefully. Later, in the context of discussion of the question of UN representation, he added that the Australian Government would not jettison Formosa in the ‘imagined’ interest of a settlement with Peking. See Current Notes , vol. 37,1966, pp.482–5.
3 Holt remarked on the ABC’s ‘Four Corners’ program that Australia was not closed to recognition of China if ‘the conditions [were] right’; China would have to accept ‘certain international obligations, certain international codes of conduct’, in addition to ‘an arrangement which will assure the future of Taiwan’.
4 Not published.
5 Chou Chung-fen.
6 The National Day of the ROC is celebrated on 10 October.
7 Chinese Marxist scholar and former Chairman and head of state of the PRC, who was censured in 1966–67 during the Cultural Revolution. He was reported in July 1967 to have been ‘overthrown’.
8 Former General Secretary of the Central Committee who was purged during 1966 as a ‘capitalist roader’ second only to Liu Shao-chi.