Canberra, 10 December 1970

Secret

Australia's Policy towards China

Attached is one copy of a paper prepared by the Policy Planning Group on Australia's policy towards China.

2. The paper attempts to re-examine our China policy in the light of our national interest. In preparing it we have attempted to limit ourselves to the generalities of the question and not to examine the largely hypothetical particulars–e.g. we suggest that Australia should participate in full discussions with various countries about tactics for the future handling of this subject in the United Nations, but we have sought not to prejudge the result of those discussions by speculating about the possibilities for a 'two China' solution or a 'package deal'.

3. The attachment is a first draft only and will be subjected to considerable discussion and revision within the Department. As yet, therefore, it has only provisional status. It has not been sent to Ministers.

4. Should you have any comments to make on the attachment, we should like to receive them urgently.

Attachment

POLICY PLANNING PAPER LP No. 2

Canberra, 7 November 1970

Australia's Policy Toward China

The purpose of this paper is to review Australia's policy on China.

[matter omitted]

II Australian Policy To Date

12. Australia extends de jure recognition to the Government of the Republic of China, resident in Taipei, as the government of China. It does not recognise the Government of the People's Republic of China, although it has indirect dealings with it, mainly in respect of trade. Australia has had consular or diplomatic relations with Republic of China since the early 1930's, with an Australian diplomatic mission in the capital from 1941 to 1949, and again from 1966, when Australia established an Embassy in Taiwan, to the present day. There was no Australian mission in the ROC between 1949 and 1966. There has been an ROC diplomatic mission continuously in Australia since 1948. Australia has consistently supported the right of the Republic of China to represent China in all the organs of the United Nations and has opposed the seating of the People's Republic of China since 1949.

13. Annex C sets out in more detail the Australian Government's attitude towards the PRC during the period 1949 to 1970, and summarises the reasons behind that policy as well as some of the arguments that have been advanced by Government Ministers in favour of a change of policy. ²

III The Need For Review

There is now an urgent need to review our policy towards China, for four good reasons:

(a) The essential reason is the growing acceptability of the PRC. Trends that have developed recently in the international community can be expected to lead to an increasing number of countries recognising Peking, even at the expense of Taiwan. This will serve to isolate our present position, to the detriment of our national interest.

(b) The last Australian review took place in 1958, when Cabinet decided that our diplomatic policy should not deviate from that of the United States.³ The latter has begun to modify its policies in South East Asia so as to reduce a disproportionate United States military presence in the region and, at the same time, to impart greater flexibility and subtlety to American policies. This has involved a gradual search for a détente with Peking, and President Nixon has now called for a paper reviewing United States policy towards the PRC. We will be left behind unless we too review our policy.

(c) Present international trade trends–the increasing difficulty in finding adequate outlets for our primary products, the tightening protectionism in the United States attitude, the implications for Australia of Britain's likely entry into the EEC⁴–threaten a breakdown of our traditional trading patterns. This makes it imperative that we should seek to expand our trade with other potential markets, one of the biggest of which is the PRC.

(d) Within Australia, support for the established policy of non-recognition of Communist China has weakened considerably. Few responsible academics favour it, the press seems largely opposed, and public opinion generally has shifted. A Gallup Poll in the Melbourne Herald on 6 October, 1970, showed that since 1969 more people ( 49%) were in favour of recognising Communist China than were opposed (35% ). Thirteen percent were in favour of removing Taiwan from the United Nations in favour of Peking, 40% were opposed and 47% were undecided.

[matter omitted]

27. The Nixon Administration has been faced not only with the problem of redefining the United States role in Asia, but also with the task of seeking accommodation with a nuclear China, certain of whose interests must be acknowledged and which cannot for ever be isolated from the rest of the world. In seeking a constructive modus vivendi the United States has taken a series of small but significant unilateral steps on travel and trade:

In July 1969, it permitted non-commercial tourist purchases of up to $100 worth of Chinese goods.

At the same time travel restrictions were relaxed to permit almost anyone with a legitimate purpose to visit mainland China on an American passport (900 passports have been validated for this purpose).

In December 1969, the United States permitted unlimited tourist purchases of Chinese goods, enabling tourists, collectors, museums, and universities to import Chinese products for their own account.

At the same time American-controlled subsidiaries abroad were permitted to conduct trade in non-strategic goods with the PRC.

In April, 1970, the United States lifted a restriction on American oil companies abroad from bunkering 'free world' vessels carrying non-strategic cargoes to Chinese ports.

Most important of all, in 1969 the United States withdrew the Seventh Fleet from the Formosa Straits.

The State Department has let it be known that it has other steps under consideration, all in the general area of contracts and trade. It has also foreshadowed the eventual reduction of American forces on Taiwan (currently less than 10,000 men) as tension in the Indo-China area is reduced.

28. American moves to improve relations with the PRC seem likely to be measured. Although there has been slight moderation of Chinese propaganda attacks against the United States, and the Warsaw talks have been resumed, Peking has so far shown no substantial sign that it is prepared to react positively towards American gestures of good faith. The State Department has assessed that the United States may need to await some resolution of the Taiwan question before United States/PRC relations can improve appreciably. It appears to have accepted the fact that it is neither possible nor appropriate for the United States to resolve the dispute between the two rival Chinese governments, nor decide the status of Taiwan. The State Department has told the United States House of Representatives that until such a resolution is achieved, the United States is prepared to deal with both the government of mainland China and the government on Taiwan on matters affecting American interests which involve the territories under their respective control.

29. The future of United States/PRC relations is also intertwined with the fate of Indo-China. While Peking continues actively to support North Vietnamese military aggression, to call for a protracted war, and to oppose a political settlement in which the United States has indicated that the PRC could have a role, it is difficult to see a breakthrough in normalisation of relations. It should be noted, however, that high level PRC officials have remarked that when the time comes to improve relations with the United States, the improvement will come about 'all at once'. The Americans interpret this as Chinese conviction that gradual improvement would have deleterious consequences for the maintenance of domestic revolutionary fervour. Whatever truth there may be in this Chinese claim, it cannot be dismissed out of hand. A breakthrough is unlikely in the near future, but not impossible, particularly in the wake of a Vietnam settlement.

30. From the foregoing it seems clear that the pace of change in American policy on China will be determined, in the first instance, by the Communist Chinese response, and especially by any political concessions that Peking may be prepared to make in return for an improvement in relations. It will also be affected by the policies of like-minded governments, especially Japan and Australia, the policies of the Soviet Union, the policies of South East Asian governments subject to direct or indirect PRC pressure and by the direction of wider international opinion expressed through the United Nations. While the ROC will also affect the pace of change in American policy, its impact will be reduced inversely to its attempts to retain diplomatically what has already been lost militarily and politically. The United States is likely to maintain its political and defence support of the ROC but it can not much longer be expected to support vain ROC claims e.g. to be the government of the whole of China in the face of a permanent, nuclear People's Republic.

31. The United States has already begun to prepare the ground for a change in policy. For the first time the United States statement in the recently concluded United Nations debate omitted any critical reference to the PRC; the entire speech was focused on preserving the right of the ROC to remain a member of the United Nations. While State Department officials have told us that the statement did not indicate a shift in American policy, it is clear nevertheless that the change in United States tactics has very important political implications, and consequences for the future handling by Australia and others of this subject in the United Nations. Moreover, the statement issued on 20 November by the State Department after the vote on Chinese representation had been taken, had the same emphasis as the American United Nations speech. Subsequently President Nixon has called for a policy review paper on United States/Chinese relations.

32. In the final analysis we must remember that the United States, as a super power, will tend to move at its own pace, and that pace will largely be dictated by the desire on the part of Washington and Peking to achieve some accommodation of interests. There is little chance that Peking's diplomacy will evolve quickly and flexibly, but should it do so we cannot expect the Americans to keep us fully briefed on every detail of change in their position. In the light of a likely quickening of United States efforts towards détente, Australia should clearly make every effort, first, to discover the guidelines of American assumptions and, second, and no less important, to impress our own fundamental interests upon the United States, before the latter commits itself to any particular course of action.

[matter omitted]

VI Implications for Australian Policy

60. It is clear from the foregoing discussion that the PRC's fortunes in the international community are waxing and those of the ROC are rapidly on the wane. It was inevitable that this should happen, given the differences in the relative strengths of the two states. This was seen clearly by Lord Casey, fifteen years ago, who in a minute to the Department of External Affairs in June, 1955, argued that we should try to influence the United States towards a calmer and less hostile attitude towards Peking; that Peking would eventually get into the United Nations; that it was right that it should do so; and that we would do ourselves harm by unnecessarily prolonged opposition to it.⁵

61. We have reached a stage where Peking will soon be admitted into the United Nations and the ROC possibly expelled, where the PRC will soon be generally accepted and the ROC increasingly isolated. The policies of the United States and Japan are in a state of flux and we may find these two major countries moving ahead of us towards a modus vivendi with the PRC. This would have the effect of exposing our position and drawing attention to it. We would soon then find ourselves singled out from our friends and neighbours, many of whom have difficulty now in understanding our apparently conflicting policy of economic ties combined with political hostility towards the PRC. This would also of course affect our freedom of manoeuvre. We have already lost much freedom of manoeuvre to promote our own interests with the PRC by our longstanding policy of unswerving support for the ROC. To continue to adhere to that policy in the face of the changes that are obviously about to occur in the international scene will mean a further narrowing of the options that are available to us. This would clearly be against our interests. In the PRC's eyes the continuation of our present China policy beyond the point when Peking has been admitted to the United Nations would be seen–rightly or wrongly–as a gratuitous act of provocation, and the PRC could be expected to treat us and our interests accordingly.

62. One of our chief interests is the maintenance and expansion of our valuable trade relations with the PRC. This will be particularly important if, as seems likely, Britain joins the EEC and if the trend towards protectionism continues in the United States. However, our trade with the PRC would almost certainly be adversely affected if we continued with our present policy. The sensitivity of the PRC to criticism and implied threats by Australia was demonstrated by the reaction of the Chinese negotiators when the Australian Wheat Board delegation, on instructions, handed them a protest note about the Hong Kong riots in May, 1967.⁶ This drew a tirade from the Chinese side, that was repeated during the next negotiations in March, 1968, and again in November, 1969. The sharpness of the Chinese reaction was probably conditioned by the fact that Peking apparently feels and has certainly expressed no serious or prolonged hostility towards Australia. We ran a real risk then of losing a significant portion of our wheat trade with China, as we would if we were to maintain our present policy beyond the time that China was admitted to the United Nations. Yet China is probably potentially one of the greatest single markets for Australian products, and one that must assume even greater importance after Britain has entered the Common Market. If, as the Minister for Primary Industry ⁷ has said, the China market is of 'critical importance' to the Australian wheat industry now, how much more important will it be in the future?

63. Australia's dilemma is that our present policy takes no account of the PRC's power and stature, except in a negative sense, and supports instead the vanishing claim of Chiang Kai-shek to represent China and to occupy China's seat in the Security Council and General Assembly. In spite of Peking's foreign policies, we must remember that China is potentially the most powerful state in Asia and one that is re-asserting itself as a great power. We must take into account the permanence and power of the PRC and the implications these pose for Australia's security; and we should balance this against the unreality of Taiwan's position. In short we must decide what we can live with, given Peking's present leverage and the options open to us.

64. Australia can clearly not influence substantially the outcome of the political conflict between the two chief contestants. However, we may be able to influence to some degree the course of action to be adopted by the United States and other like-minded governments. We have had indications in the past that the United States, Indonesia and Japan in particular, will be extremely interested to see what Australia comes up with in our future approach to the China issue. We now appear to have the opportunity to impress our interests on our allies and friends in the Pacific and South East Asian region.

65. What is our essential aim in this new situation? It must be to preserve and enhance our security and other interests. This cannot be done unless we come to terms with China, so that the hostility that Peking might otherwise direct at us, with its attendant dislocation of our trade and other interests, might be averted. Before we can come to terms with China, we need to free our foreign policy from its present constraints. This, then, must be our immediate aim–not the preservation at all costs of the ROC as the Government of China, nor even of its membership of the United Nations, but the freeing of our policy from its constraints.

66. At the same time we have a valuable relationship with Taiwan which we would wish to see continued for as long as possible, but not at the expense of improved relations with Peking. If we are to approach a more flexible position aimed at a more constructive relationship with the PRC we will need to introduce changes of substance in our policy. This will involve a graduated withdrawal of our diplomatic support from the ROC, a low posture policy towards it and a parallel softening of our attitude towards the PRC. Whatever concrete steps are adopted in this direction, in the near future they would clearly be limited by our desire, on the one hand, not to appear to be unceremoniously jettisoning the ROC, and on the other, by maintenance of the principle that a PRC/ROC settlement should not be effected by force. Our immediate concern is therefore basically two-fold:

(a) How and at what pace to introduce changes of substance in our policy towards the PRC; and

(b) At the same time how to contribute to the continued existence of Taiwan as a separate entity, so long as it desires, and the right of Taiwan to remain a member of the United Nations, but not as the Representative of China.

67. To the extent that Australian policy does not admit of unconditional recognition of the PRC (along the lines of the Canadian formula), it ignores the political reality of Peking's present negotiating strength and the parallel diplomatic weakness of the ROC. Recognition of the PRC by Australia would clearly serve to remove this anomaly and should therefore be our ultimate objective in the framing of a new policy on China. However, recognition at this time would involve a complete reversal of our present policy towards the ROC. We would have dumped them overnight. It would also be inconsistent with our military presence in Vietnam and weaken American bargaining power in their efforts to bring Hanoi (and possibly Peking) to a political settlement. It would bring our credibility into question among some South East Asian governments, e.g. South Vietnam, Cambodia, Laos and Thailand in particular, but probably not among others, e.g. Indonesia, Malaysia and Singapore who would be inclined to see Australian recognition of the PRC as a very 'Asian' act. We could live with some challenge to our credibility if Australian recognition did not also strengthen the resolve of Peking and Hanoi at this time to win in Indo-China, which of course it would. Nevertheless, our policy should be so framed as to allow for a gradual movement towards recognition of the PRC not later than, and preferably before, Peking's entry into the United Nations.

68. The policies we are to adopt in our future approach towards the PRC and the ROC will be reflected most dramatically in the United Nations where the problem of China's representation is an extremely complex one. Our overall approach should clearly involve close consultations with the United States in particular, Japan, Indonesia and perhaps other South East Asian governments who share our own main interests. Without prejudging the results of these consultations, it is clear that if we wish to see Taiwan preserved as a member of the United Nations she will have to be brought to accept membership as Taiwan or some other entity, but not as China. A move towards such a change will inevitably involve a confrontation with President Chiang Kai-shek and his administration. But this is a necessity that had better be faced sooner rather than later if any position for the Government of the ROC in the United Nations is to be preserved. It would be foolhardy of Australia to join in attempts to devise a procedure that would open the door for the entry of the PRC into the United Nations and to the China seat on the Security Council, while preserving separate membership for Taiwan, without ascertaining before the next United Nations Session precisely where the Nationalist Chinese stand. If they intend to continue to oppose what would in effect be a 'One China–One Taiwan' formula, Australia should consider carefully whether it is in our interest to join in such a move at the next or subsequent Sessions. We are fortunate that we have at least ten months (and perhaps longer) before a need will arise to disclose our intentions substantially to Peking.

69. A decision on whether Australia should seek to identify itself with a 'One China–One Formosa' move in the United Nations in the future, should clearly to⁸ taken in the light of developments within the next several months, and will depend principally on:

(a) whether the ROC accepts it;

(b) whether the United States and Japan in particular are prepared to support such a move; and

(c) whether the numbers for its success appear to be there.

We should remember that the development of a procedure to safeguard Taiwan's right to membership may founder badly through lack of general support, even if the ROC could be persuaded to accept a diminished status. Without their cooperation, however, Australia has no option but simply to resign itself along with several others to the facts of life. Consultation with our allies, a confrontation with President Chiang Kai-shek and timing are therefore key elements in our future approach. What we should seek to avoid is to identify ourselves with a 'One China-One Taiwan' move in the United Nations if it is unlikely to work or if it will only be good enough for a year or two. It is possible that the present leaders of the ROC may prefer to withdraw from the United Nations should Peking gain entry. If so, we can probably do little more than to accept this as a fact of life and it may well be the best way out for us; over the long term Taiwan is likely to become more amenable to accommodation with Peking as the old, bitterly opposed generations pass from the scene. We would be unwise to try to shore up the ROC, either alone or in concert with others, if it attempts to retain its inflexible and unrealistic position.

70. We are thus left with many factors which will depend on the intentions and purposes of others and which may partly be clarified with the passage of time. Without wishing to prejudge the results of consultation with our allies and friends, we would suggest the following brief description of the elements of a possible flexible position that Australia might follow in the future. These elements rest on the following premises:

(a) that we should adopt as a policy objective the recognition of the PRC;

(b) that we should begin moving towards an improvement of relations with the PRC;

(c) that we should gradually diminish our diplomatic support for the ROC;

(e) that we. should not be left behind the United States but preferably be ahead of it in our posture towards the PRC; and

(f) that Taiwan has the right to separate status pending a peaceful resolution of the problem.

A Flexible Position

MODALITIES:

Impress on the United States that recognition of the PRC is our ultimate objective and that it is in our national interest (security, geopolitical position of Australia in South East Asia and trade) to exchange diplomatic recognition with the PRC preferably not later than Peking's entry into the United Nations.

Impress on the United States the need to talk the ROC into greater realism; tell both the United States and the ROC that Australia will not assist in a shoring-up operation of the ROC without the co-operation of the Nationalists.

Consult actively with the United States, Japan, New Zealand and South East Asian countries as well of course as with the ROC, on policy towards China. We should consider proposals purely on their merits, rather than in the light of fixed doctrine.

Resist ROC initiatives for closer relations and run down those existing links not vital to our interests in Taiwan.

Seek expanded trade with the PRC, both by removing any non-essential restrictions on trade relations and by encouraging private traders to visit the PRC.

Move towards low-level official and semi-official contacts with the PRC, e.g.:

visits by our Trade Commissioner in Hong Kong;

provided we can be sure that they will be treated properly, visits by journalists including, after a time, the ABC;

reciprocal visits from the PRC.

PRESENTATION:

Stress that the China question is essentially a problem for the Chinese people and for them to resolve in their own best interests.

Declare, as the Americans have done, that we are prepared to deal with both the Government of the PRC and the Government on Taiwan on matters affecting Australian interests which involve the territories under their respective control.

Cease hostile references to the PRC, but in line with our policy towards the USSR, criticise frankly major actions which offend us. We should keep such criticism separate from statements about China's representation in the United Nations.

Refer to People's Republic of China rather than 'Communist', 'Continental' or 'Mainland' China.

Refer to 'Taiwan' and the 'Government on Taiwan' rather than to ROC or Nationalist China and the Government of the ROC or of Nationalist China. 'Taipei' could often be used skilfully.

Avoid warm or excessively laudatory references to Taiwan–keep language polite but restrained.

Say that Australia stands ready to welcome the PRC back into the international community in accordance with the terms and conditions of the United Nations Charter.

Stress Taiwan's right to separate status rather than right to self-determination, pending a peaceful resolution of the problem between the two sides.

Say, that as far as the United Nations is concerned, Taiwan, which is more populous than most members, has faithfully discharged its obligations as a member of the United Nations, and that its right to remain a member should not be taken away.

Where possible, speak of Australia's partnership role in China question–with United States, Japan, New Zealand and South East Asian partners–rather than narrower bilateral focus.

[NAA: A1838, 714/3/2, xv]

1 J.R. Holdich, Head, Policy Planning Group, Department of Foreign Affairs.

2 Not published.

3 See footnote 4, Document 143.

4 The United Kingdom had made, in December 1969, its third application to join the European
Economic Community.

5 See footnote 1, Document 58.

6 From March to May 1967, a series of riots and strikes directed against the British, and apparently connected with the PRC's Cultural Revolution, occurred in Hong Kong. The British authorities opposed the disturbances, which effectively disappeared by the end of the year.

7 J.D. Anthony.

8 The word 'to' should presumably read 'be'.