Canberra, 7 January 1972

Secret

China Policy

Attached, for your discussions with the Secretary and Deputy Secretary A¹ on Monday 10 January, is a copy of a draft Cabinet submission on China Policy.

2. The draft sets out the various alternatives open to the Government, and the major implications of each of those alternatives, without trying to argue a particular line or coming to a definite conclusion.²

Attachment

Secret

CHINA POLICY

The Government's established objective is the normalisation of bilateral relations with Peking. It had been hoped that this could be brought about gradually, concentrating to begin with on trade, consular matters, visits, etc. Peking has made it clear, however, that normalisation involves first and foremost Australian recognition of Peking as the only lawful government of China, and that other aspects of normalisation can be discussed only when that is done. (Some background is at Annex A.) I see no prospect whatever of Peking's changing this attitude. Indeed, as more and more countries recognise Peking (the rapidly changing pattern is set out in Annex B), its attitude will only harden and its conditions precedent for recognition will probably increase.

THE OPTIONS

2. The Government thus needs to decide whether in principle it is prepared to recognise Peking [on their conditions].³ If it is, the dialogue could be resumed on the basis of that decision in principle–though we should have to expect protracted negotiations on the details–and the objective of normalising our bilateral relations would be attainable. If it is not, that objective would not be attainable, the dialogue would effectively be at an end, and the Government would need to choose between other possible options, recognising that normalisation of relations in the future would be more difficult.

3. The principal of these other options are:–

(a) all–out support (e.g. in international bodies) for the GRC⁴ as the Government of China;

(b) qualified support (such as we are now giving in international bodies) to both Peking and Taipei;

(c) the diminution of our political links with Taipei (e.g. downgrading or removing our Embassy, but keeping some official representation) while continuing to recognise the GRC;

(d) support for Taipei as the de jure Government of Taiwan, and for Peking as the de jure Government of the Mainland.

THE IMPLICATIONS

4. Each of the options in the previous section carries with it certain implications, some clear–cut but others not.

5. Recognition of Peking. The one certain set of implications is that the Australian and ROC Embassies in each other's capital would have to be withdrawn; Australia would not be able to support either the GRC's claims to be the Government of China or even any claim by it to be a government of Taiwan; and Australia would at best be able neither to endorse nor to challenge (to use the Canadian Foreign Minister's words) Peking's claim to Taiwan.

[matter omitted]

7. It would be misleading to assume that Peking sees nothing to gain from establishing diplomatic relations with Australia. Although Australia is not a country of major importance to China, as are the United States and Japan, the very fact of our close relationship with those two countries, and our good standing with South East Asian countries, are factors which must make us of some significance to China. It should be disposed therefore to look for a reasonable recognition formula.

8. An early resumption of the dialogue on the basis of an Australian decision in principle to recognise Peking would enable us to point to our own activity at the time of President Nixon's visit (21–28 February) and any subsequent shift in United States policy. The same would be the case with respect to changes in Japanese policy; Mr Sato has said that the establishment of relations between Japan and China can be expected in 1972, and we have some information which suggests that Japan is prepared to negotiate secretly with China. Should either Japan or the US move dramatically ahead of Australia, any subsequent decisions by us would tend to be interpreted as simply following the lead of our major friends and as unwillingness to make our own independent decisions.

9. Provided we could secure diplomatic relations with Peking while leaving vague (as does the Canadian formula) whether we regarded 'China' as including Taiwan, we should be able to avoid committing ourselves, publicly or privately, on such matters as whether Peking had the legal right to take over Taiwan by force, while leaving open the possibility of stating our opposition to any such move should it eventuate. Australia's negative vote on the Albanian resolution could be used in support of that position. It could even be pointed out by Australia that its recognition of Peking, and the noting of Peking's claim to Taiwan, would make no practical difference to the existing situation in which the GRC relies on its own strength and its treaty with the USA.

[matter omitted]

11. Qualified support for both PRC and ROC. This would in effect continue our present policy, which has involved a willingness on our part to see Peking seated in the UN, to encourage trade, cultural and other contacts, and to lift some strategic export embargos, while at the same time continuing to recognise the GRC without either accepting or rejecting its territorial claims. It is essentially a policy based on the factual situation that Taipei controls Taiwan and Peking the mainland; but it also involves de jure recognition of the GRC but not the PRC. The one certain implication is that Australia's objective of normalising bilateral relations with Peking would be unattainable. On the other hand, a continuation of our present policy would not offend the ROC, nor should we lose much ground with the PRC, provided we did not associate ourselves with schemes for the independence of Taiwan. We would not touch Indonesian sensitivities, or act in any other way as an influence on Southeast Asian countries to move towards establishing relations with Peking. But we would not be able to indicate that a dialogue with the PRC was continuing, and we would run the risk of being left behind by most other countries including, as the year progresses, the United States and Japan. We could also find ourselves under increasing pressure from the ROC for closer association in various spheres.

12. Diminution of links with Taipei. While not in itself making attainable the objective of normalising our bilateral relations with Peking, this would make easier any future Australian decision to recognise Peking and would smooth out the effects of such a decision–though it might well prolong or intensify the criticism which any change in policy might attract, without any real or final benefit accruing to us. It could ease the way to some marginal contact with Peking.

[matter omitted]

THE ATTITUDE OF OTHERS

17. In considering whether to decide in principle to recognise Peking, account must be taken of the effect of such a decision on other countries of importance to us.

18. USA. President Nixon has made it clear publicly that there is no prospect of the USA and the PRC entering into diplomatic relations, because (so long as the ROC exists) the USA will not meet Peking's prior conditions–withdrawal of US recognition of the ROC and the lapsing of the Defence Treaty. What appears to be a negative, dead end policy is, however, heavily qualified⁵ by the President's conviction that the US 'can have relations' with Peking 'in terms of communication' (a course not open to us); and by the White House's evident hope–and indeed at least implied support–for a solution worked out by the two Chinas themselves. In these circumstances, we doubt that the USA would be perturbed by an Australian decision to recognise Peking: it would not affect the US decision to stick by Taiwan. It might conceivably add to the pressures in Taiwan to come to an accommodation with Peking.

19. Japan. The pressures are growing in Japan for recognition of Peking. Mr Sato himself has even said that the establishment of relations between Japan and China can be expected in 1972. On the other hand, the obstacles to Japanese recognition are greater than in our own case: Japan has a deeper political relationship with the ROC (including the Peace Treaty), greater commercial and investment ties, and a larger security interest. Moreover, so long as the US/ROC and US/Japan Defence Treaties continue, Japan is obliged to make its facilities available to the US in its defence of Taiwan. These considerations suggest that Japan would prefer that an Australian decision to recognise Peking be delayed, at least until it was further down the road to working out its own problems.

[matter omitted]

23. ROC. Taipei would of course be made most unhappy by an Australian decision to recognise Peking. Nevertheless, it would not be fatal to their cause: only the USA, and to a lesser extent Japan, are crucial to the GRC's position. There are some indications that the ROC is moving to cope with any Australian decision to break relations with it (e.g. setting up private trade 'offices' in Sydney and Melbourne); and the GRC recently stated that emphasis would be given to the development of economic ties with foreign governments, whether they had relations with the ROC or the PRC. Withdrawal of recognition from the ROC would of course mean the end of our Trade Agreement with the ROC (the only significant bilateral international agreement we have with it) but should not prevent us establishing (or continuing) an officially–supported trade office in Taipei and building up our trade with Taiwan.

[matter omitted]

[NAA: A1838, 3107/38/18, xxiii]

1 K.C.O. Shann.

2 An annotation by McMahon dated 10 January reads: 'What are the advantages of recognition? a) economic b) political c) military–I would like Defence views'.

3 The words in square brackets were written by hand.

4 The acronym 'ROC' was written by hand above the acronym 'GRC' in the document.

5 Handwritten corrections were made to this sentence in the original. They read: '[Although this] appears to be [an impasse, the situation is modified] ... '