Taipei, 30 June 1972
Secret Personal
It may be of some use at this stage to sum up my own ideas on how our China policy could best develop. In other writings to the Department I have set out some arguments in favour of points made below. I would greatly welcome any comments you or the Department might wish to make on this letter, and would of course have no objection to its being passed to the Minister if you saw value in that.
2. I assume that the following points are broadly accepted as a foundation for future policy:
(a) it is clearly in Australia’s interests to proceed steadily towards normalization of relations, and the eventual establishment of diplomatic relations, with the PRC;
(b) this aim is almost certainly unattainable so long as we retain official ties with the ROC; the PRC has not budged on this point since 1949 and is unlikely to do so in the future;
(c) the development of present United States policies is no real parallel for us; the disparity in power is too great, and any gains for the PRC too slight, for it to display to us much, even superficial, flexibility;
(d) apart from a generalized aim of maintaining peace, stability and growing prosperity in the area, our main, strictly national, interest in Taiwan is in present and prospective trade;
(e) the burden of preserving international peace over Taiwan can rest only on the United States and PRC. The Nixon visit to Peking, and the ROC’s essential dependence on the United States for its defence, combine to make the prospects for peace over Taiwan good, at least at this stage. We can do little or nothing to enhance these prospects, which at this time give us scope for flexibility in our own policies.
(f) while displaying maximum flexibility, it would be most desirable, because of our comparatively long association with the ROC, for the sake of our trade and trade prospects, because we have no interest in contributing to economic problems or political instability in Taiwan, and because of the possible effect of our actions on other regional countries’ policies, not to appear to abandon the ROC completely and precipitately.
3. Point (f) is the area in which opinions as to what action should follow are most likely to diverge widely. My own opinion is based on the following beliefs:
(a) we are already at the point where we publicly accept that the PRC exercises effective jurisdiction over the mainland. Provided that we do not specifically endorse the PRC’s claim to Taiwan, there is no fundamental impediment to recognition of the PRC in the light of the changed circumstances since we first recognized the ROC. The problem of presentation would of course remain considerable and adjustments would have to be made to some of the consequences of our being in relations with the ROC (e.g. the exchange of missions with the ROC and the ROC/ Australian Trade Agreement);
(b)the ROC is already at the point where it publicly states that it wishes to develop trade with more countries including those in diplomatic relations with the PRC (though not the PRC itself and its closest allies);
(c)our trade with Taiwan has, for the most part, a sound commercial basis. Provided that we leave commercial channels wide open and make provision for easy movement of business visitors in both directions, it should continue to grow, even if not at recent rates;
(d)the ROC has recently been conditioned to expect a greater change in our China policies than has in fact taken place so far. The momentum should be kept up. Provided that we proceed steadily and do not give the impression that our moves towards normalization of relations with the PRC are completely stalled, at any point, recognition of the PRC on terms which the Australian Government would find publicly acceptable, would come as no lasting shock to the ROC (though it would be somewhat vocal in the question!);
(e)the ROC increasingly accepts that, unless there is some major upheaval on the mainland which gives it a reprieve, it is likely to suffer increasing international isolation in the formal diplomatic sense. It realises that its whole future, its possible capacity to live with or even at some future time to come to terms with the mainland, and probably even internal stability in Taiwan depend on its remaining an increasingly prosperous economic entity. It has, for about a year now, clearly and publicly put ‘the economy first’ . There is little reason to believe that, if we made it completely clear (as Argentina for example has done) that ROC/Australian trade would continue, a major change by us would seriously affect economic and political stability in Taiwan;
(f)other regional countries could probably be brought to accept this point of view. Some, including Japan, might well do so quite readily and might even welcome our setting a pattern. The arguments we put to others might have to vary. Indonesia, for example, could be told that we were coming into general line with them (Indonesia recognizes the PRC, but has a Chamber of Commerce office in Taipei). The others might well, albeit somewhat reluctantly, accept that, in our view and until the future is clearer, the essential thing for Taiwan is to survive as an economic entity, and that we will do nothing to affect its prospects of doing so. The United States could, I think, be persuaded to accept much the same argument, firmly presented, particularly since it could be strongly argued that it was in large part United States policies themselves which had led us to move as we did in our own interests.
4. The above points bring out my strong conviction that the maintenance of adequate trade channels between Australia and Taiwan should be regarded as the essential point in our future relationship with the ROC, and that there are adequate grounds to argue that maintenance of such channels means that we are not abandoning Taiwan. It is not irrelevant to comment that, in the light of the restrictions and reservations we have for some time applied1 the development of closer political or other ties with the ROC, this Embassy’s function has often seemed to me to be more that of a Trade Commission with political and economic reporting, and consular, functions than that of a normal Embassy.
5. If the above can be accepted, we would appear to have considerable room for manoeuvre. Such manoeuvre should desirably be conducted steadily over a reasonably, but not excessively, protracted period and always with a defined aim in view. Several things could be done entirely on our own initiative, without any need to reach agreement with either the PRC or ROC. We could for example:
(a) continue to make public statements stressing that our aim is steady normalization of relations, and eventually formal relations, with the PRC. Such statements help to condition the ROC and other countries to the likelihood of a major change in our position;
(b) bring out publicly the fact that trade is the essential for the ROC, that we have a non–political interest in its continuation, that it contributes to overall economic growth and stability, that we hope it will continue and grow, and that we intend to do all we can to ensure that it does. The point that much of its continuation and growth depends on private traders could be stressed;
(c) put to hard study the means whereby growth in trade with Australia could be best assured, and the movement of business visitors in both directions best facilitated, if we entered into formal relations with the PRC. For example, we might be well advised to encourage the early establishment of a non–official Australian office in Taipei which would handle some trade promotion work and act, if necessary, as a channel for visa applications if we came to the point where there was no official Australian representation in Taipei. I believe that the ROC is already in the process of making such preparations in Australia.
6. The above suggestions would seem comparatively simple to implement. My last point may seem more dramatic, but would, I believe, be very much in line with our long–term interests. It is that, whenever circumstances permit, and provided that we were willing to hold our ground at that point for more than, say, six months, the Embassy in Taipei should be converted into some form of a Trade Office.
7. I do not myself believe that we could enter into formal relations with the PRC so long as any official Australian presence existed in Taipei. Nevertheless, there could be tactical advantage in taking this initial step since:
(a) this form of representation would better reflect the present realities of our relationship with the ROC than does an Embassy;
(b) it could not be represented as complete abandonment of the ROC but at the same time would give clear notice of a change in our relationship with Taiwan;
(c) it would ease the transition, which may eventually be necessary, from having an Embassy in Taipei to having no official representation. This could be a less disruptive end to an old relationship than an abrupt cessation of official representation;
(d) such a unilateral move by us could form the basis for another round of the dialogue with the PRC. It could be represented to Peking, and publicly, as an indication of our earnestness in seeking normal relations with the PRC. We could argue that the presence of a Trade Office did not affect questions of sovereignty in the least; it simply showed that we have legitimate, peaceful interests in Taipei—and interests—which benefit the people in general—which we are most reluctant to abandon. The PRC’s reaction would of course seem entirely predictable; eventually we would almost certainly have to withdraw the Trade Office also if we wanted to move on to formal relations with Peking. Nevertheless, there would be value in assessing the PRC’s reaction carefully and in some detail since it might see our move as a step—even if inadequate—in the right direction, taken cautiously in the light of the difficulties Peking knows we have with the China question.
8. The main objection to this gambit could be that it would focus PRC attention on our trade with Taiwan. Some might see benefit in not doing so, and in hoping that the PRC would tacitly acquiesce in the continuation of trade when the time came. I doubt whether anything would be lost by grasping this particular nettle. I doubt whether the PRC would see much practical hope of our suspending trade with Taiwan in response to its pressures, unless those pressures were accompanied by concrete promises of certain markets on the mainland. Since it could hardly make such promises, it could well let the general question pass and concentrate on the question of official representation.
9. There would be no need to require the ROC to change its form of representation in Australia at the time we did so in Taipei. Such a change—in fact withdrawal of all official presence—would become necessary only when Australia established formal relations with the PRC.
10. Many experts appear to have master-plans for the development of Australia’s relations with the PRC. I have sought to put my own thinking clearly on paper in some detail in the belief that it is reasonably sound, takes account of many of our difficulties and could be useful as a basis for study and possible decision.
[NAA: A1838, 3107/38, xi]
1 The word ‘to’ seems to have been omitted here.