A new realism

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Title:
A new realism factfinding mission to the People's Republic of China, July 3-13, 1978 : report
Physical Description:
vii, 132 p. : 24 cm.
Language:
English
Creator:
United States -- Congress. -- House. -- Committee on International Relations. -- Subcommittee on Asian and Pacific Affairs
United States -- Congress. -- House. -- Committee on International Relations
Publisher:
U.S. Govt. Print. Off.
Place of Publication:
Washington
Publication Date:

Subjects

Subjects / Keywords:
Relations -- China -- United States   ( lcsh )
Relations -- United States -- China   ( lcsh )
Economic conditions -- China -- 1976-2000   ( lcsh )
Foreign relations -- China -- 1949-   ( lcsh )
Economic conditions -- China -- 1949-   ( lcsh )
Politics and government -- China -- 1949-   ( lcsh )
Genre:
bibliography   ( marcgt )
federal government publication   ( marcgt )
non-fiction   ( marcgt )

Notes

Bibliography:
Includes bibliographical references.
General Note:
At head of title: 95th Congress, 2d session. Committee print.
General Note:
Dec. 1978.
General Note:
Reuse of record except for individual research requires license from LexisNexis Academic & Library Solutions.
General Note:
CIS Microfiche Accession Numbers: CIS 78 H462-58
General Note:
Reuse of record except for individual research requires license from Congressional Information Service, Inc.
Statement of Responsibility:
by the Subcommittee on Asian and Pacific Affairs to the Committee on International Relations, U.S. House of Representatives.

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 022483474
oclc - 04537749X
lccn - 79600630 //r82
Classification:
lcc - KF49
System ID:
AA00024039:00001

Table of Contents
    Front Cover
        Page i
        Page ii
    Foreword
        Page iii
        Page iv
    Letter of transmittal
        Page v
        Page vi
    Table of Contents
        Page vii
        Page viii
    Delegation introduction
        Page 1
        Page 2
        Page 3
        Page 4
    Delegation conclusions
        Page 5
        Page 6
        Page 7
        Page 8
    Delegation recommendations
        Page 9
        Page 10
    Delegation report
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
    Conversations with PRC officials
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
        Page 32
        Page 33
        Page 34
        Page 35
        Page 36
        Page 37
        Page 38
        Page 39
        Page 40
        Page 41
        Page 42
        Page 43
        Page 44
        Page 45
        Page 46
        Page 47
        Page 48
    The itinerary
        Page 49
        Page 50
        Page 51
        Page 52
        Page 53
        Page 54
        Page 55
        Page 56
    Supplementary analyses
        Page 57
        Page 58
        Page 59
        Page 60
        Page 61
        Page 62
        Page 63
        Page 64
        Page 65
        Page 66
        Page 67
        Page 68
        Page 69
        Page 70
        Page 71
        Page 72
        Page 73
        Page 74
        Page 75
        Page 76
        Page 77
        Page 78
        Page 79
        Page 80
        Page 81
        Page 82
        Page 83
        Page 84
    Appendix A. Itinerary listing
        Page 85
        Page 86
    Appendix B. Hong Kong press conference transcript
        Page 87
        Page 88
        Page 89
        Page 90
        Page 91
        Page 92
    Appendix C. Teng Hsiao-ping interview with Japanese journalists
        Page 93
        Page 94
        Page 95
    Appendix D. Selected press clippings
        Page 96
        Page 97
        Page 98
        Page 99
        Page 100
        Page 101
        Page 102
        Page 103
        Page 104
        Page 105
        Page 106
        Page 107
        Page 108
        Page 109
        Page 110
        Page 111
        Page 112
    Appendix E. PRC defense "white paper"
        Page 113
        Page 114
        Page 115
        Page 116
        Page 117
        Page 118
        Page 119
        Page 120
        Page 121
    Appendix F. Summaries of 1977 normalization hearings held by the Subcommittee on Asian and Pacific Affairs
        Page 122
        Page 123
        Page 124
        Page 125
        Page 126
        Page 127
    Appendix G. American Bar Association delegation
        Page 128
        Page 129
        Page 130
        Page 131
        Page 132
Full Text



95th Congress COMMITTEE PRINT
2d Session




A NEW REALIS

Factlinding Mission to the Peqpl epublic of China,
;J JN7
July 3-13 1 JA



REPORT
BY THE
SUBCOMMITTEE ON ASIAN AND PACIFIC AFFAIRS TO THE

COMMITTEE ON
INTERNATIONAL RELATIONS
U.S. HOUSE OF REPRESENTATIVES








DECEMBER 1978



Printed for the use of the Committee on International Relations

U.S. GOVERNMENT PRINTING OFFICE 35-200 WASHINGTON : 1978













COMMITTEE ON INTERNATIONAL RELATIONS CLEMENT 3. ZABLOCKI, Wisconsin, Chairman L. H. FOUNTAIN, North Carolina WILLIAM S. BROOMFIELD, Michigan
DANTE B. FASCELL, Florida EDWARD 3. DERWINSKI, Illinois
CHARLES C. DIGGS, JR., Michigan PAUL FINDLEY, Illinois
ROBERT N. C. NIX, Pennsylvania JOHN H. BUCHANAN, JR., Alabama
DONALD M. FRASER, Minnesota J. HERBERT BURKE, Florida
BENJAMIN S. ROSENTHAL, New York CHARLES W. WHALEN, JR., Ohio
LEE H. HAMILTON, Indiana LARRY WINN, JR., Kansas
LESTER L. WOLFF, New York BENJAMIN A. GILMAN, New York
JONATHAN B. BINGHAM, New York TENNYSON GUYER, Ohio
GUS YATRON, Pennsylvania ROBERT J. LAGOMARSINO, California
MICHAEL HARRINGTON, Massachusetts WILLIAM F. GOODLING, Penisylvania
LEO J. RYAN, California SHIRLEY N. PETTIS, California '
CARDISS COLLINS, Illinois JOEL PRITCHARD, Washington
CARDISS COLLINS, Illinois STEPHEN J. SOLARZ, New York HELEN S. MEYNER, New Jersey DON BONKER, Washington GERRY E. STUDDS, Massachusetts ANDY IRELAND, Florida DONALD J. PEASE, Ohio ANTHONY C. BEILENSON, California WYCHE FOWLER, JR., Georgia E (KIKA) DE LA GARZA, Texas GEORGE E. DANIELSON, California JOHN 1. CAVANAUGH, Nebraska JOHN J. BRADY, Jr., Chief of Stff


SUBCOMMITTEE ON ASIAN AND PACIFIC AFmRs LESTER L. WOLFF, New York, Chairman L. H. FOUNTAIN, North Carolina J. HERBERT BURKE, Florida
GUS YATRON, Pennsylvania TENNYSON GUYER, Ohio
HELEN S. MEYNER, New Jersey ANTHONY C. BEILENSON, California EDWARD J. PALMER, Subcommittee Staff Director JON D. HOLSTINE, Minority Staff Consultant CHRISTOPHER D. W. NELSON, Subcomm ttee Staff A88clate JAMES J. PRZYSTUP, Subcommittee Staff A8sociate LINDA G. SILVER, Staff Assistant

I Resigned from the committee Sept. 20, 1978. S Elected to the committee Sept. 20, 1978.
(rr)









FOREWORD


WASHINGTON, D.C., December 15, 1978.
The following report has been submitted to the Committee on International Relations of the House of Representatives by a delegation of the Subcommittee on Asian and Pacific Affairs which visited the People's Republic of China July 3 to July 13, 1978. The report .s being printed for use by the Congress in its deliberations on matters affecting relations between the United States and the People's Republic of China.
The views and findings in the report are those of the congressional delegation and do not necessarily reflect the views of the members of the Committee on International Relations.
CLEMENT J. ZABLOCKI, Chairman, Committee on International Relations.
(M)















LETTER OF TRANSMrffAL


WASHINGTON, D.C., December"l5, 1978. Hon. CLEMENT J. ZABLOCKI,
Chairman, Committee on International Relations, Ho use of IRepresentatives,
Washington, D.C.
DEAR MR. CHAIRMAN: The enclosed report, "A New Realism: Factfinding Mission to the People's Republic of China," covering the pel-iod July 3-13, 1978, is hereby submitted to the House International Relations Committee.
The members of the delegation were Chairman Lester L. Wolff, Representatives L. H. Fountain, J. Herbert Burke, and R. Tennyson Guyer, of the Subcommittee on Asian and Pacific Affairs; Representatives Eligio, de la Garza and Larry Winn, Jr., of the International Relations Committee; and Representative Charles Rangel of the Committee on Ways and Means. Others with the delegation included Mr. Edward Palmer, staff director of the Subcommittee on Asian and Pacific Affairs, and Mr. Christopher Nelson, staff associate on the subcommittee. Upon the delegation's arrival in Shanghai, Mr. Richard Bock, Counselor at the U.S. Liaison Office in Peking, joined thea delegation at our request.
During the 10-day stay, the delegation visited Shanghai, Peking, Sian, and Canton. We met with various Government officials, including Senior Vice Premier Teng Hsiao-ping; Vice Foreign Minister Wang Hiai-jun; Vice Minister of Foreign Trade Wang Jun-sheng; Ambassador Hao Teh-ching, President of the People's Institute of Foreign Affairs; Dr. Chou Pei-yuan, Vice President of the Academy of Sciences and President of Peking University and many other individuals who gave generously of their time, hospitality, and views. Ambassador and Mrs. Leonard Woodcock, and their staff at the Liaison Office in Peking provided excellent assistance, and helped make this mission highly successful. The itinerary of the mission included onsite inspections of factories, hospitals, communes, and educational and cultural institutions.
The primary purpose of this report is to provide the Congress with current and personal impressions of the People's Republic of China and an evaluation of the changes in China since the fall of the "Gang of Four," and the reemergence of Vice Premier Teng.
The delegation is indebted to Ambassador Han-hsu and his staff at the Liaison Office of the People's Republic of China in Washington, D.C., for their work with the subcommittee in preparing for the mission. The delegation wishes to extend special thanks to Ambassador Hao and his staff at the People's Institute, who provided invaluable
(V)





ITT

information, escort, and translation services during our visit. The subcommittee also wishes to thank Ambassador Leonard Woodcock and his staff in Peking, and Counsel General Thomas Shoesmith and his staff in Hong Kong for their advice and assistance during and after the mission. Dr. Robert Sutter, Congressional Research Service, Library of Congress, provided information and written materials to the subcommittee which have been of great assistance. Finally, the delegation would like to thank Mr. Edward J. Palmer and Mr. Christopher D. W. Nelson of the subcommittee staff for their assistance in the planning and execution of the mission and in the preparation of this report.
We hope that the following report will be helpful to the coniniitt ee, the Congress, the administration, and the American people as we attempt to develop policy toward normalization of relations with the People's Republic of China.
Sincerely,
LESTER L. WOLFF,
Chairman, Subcommittee on Asian and Pacific Affairs.,















CONTENTS



Foreword--------------------------------i
Letter oftrnmta------------------------Delegation itouto-----------------------Principal tee------------------------Key qetos-------------------------3

Delegation cnlsos-----------------------5
The normalization process---------------------------------------- 5
The Republic of China (Tia)-----------------5
Foreign afis-------------------------6
Domestic policy, trade, and eoois---------------7
Delegation reomnain---------------------9
Delegation reot-------------------------11
Purpose of the 1978 miso-------------------11

1978 msin-------------------------13
Foreign afar-------------------------14
The Republic of China (awn-----------------16
Education, foreign trade, and domestic growth------------18
Supplemental statement of Representative L. H. Fountain ------------21
Conversations with PRC officials------------------------------------- 23
Vice President Teng Hsa-ig-----------------23
Ambassador Hao Te-hn-------------------28
Vice Foreign Trade Minister Wang Jun-sheng ----------------------36
Vice President Chou Pci-yuan, Academy of Sciences-----------------42
The itinerary----------------------------------------------------- 49
Shanghai----------------------------49
Pekig------------------------------------------50
Sian~-----------------------------------------52
Cantn------------------------------------------52
Peking University and Chiaotung University, Sian----------53 Supplementary anlss----------------------57
PRC foreign poiy----------------------57
Normalization: PRC and RC-----------------62
Trade and economic development in the PC-----------66
Modernization: The workers and the peasants------------69
China since the cultural reouin----------------74
Appendixes:
A. Itinerary litn-----------------------85
B. Hong Kong press conference transcript--------------87
C. Teng Hsiao-ping interview with Japanese journalists--------------93
D. Selected press cipns-------------------96
E. PRC defense "white pae"-----------------113
F. Summaries of 1977 normalization hearings held by the Subcommittee on Asian and Pacific Afis-------------122
G. American Bar Association delegation -------------------------- 128
(VII)














Digitized by the Internet Archive in 2013
















http ://arch ive.org/details/newrealismfactf iOOu nit











DELEGATION INTRODUCTION

From July 3 to 13, 1978, the Subcommittee on Asian and Pacific Affairs conducted a factfinding mission to the People's Republic of China. Members of the delegation included Subcommittee Chairman Lester L. Wolff Representatives L. H. Fountain, J. Herbert Burke, and R. Tennyson Guyer of the subcommittee; Representatives Eligio, de ]a Garza and Larry Winn of the Committee on International Relations; and Representative Charles Rangel of the Committee on Ways and Means.
The'delegation represented the first time a formal, standing committee of the House of Representatives had been officially invited, as a subcommittee, to the People's Republic of China. Our hosts, the People's Institute of Foreig Affairs, extended the invitation to the 'Subcommittee on Asian an Pacific Affairs. Previous congressional groups had visited China in a private capacity, or through arrangements facilitated by the executive branch.

PRINCIPAL THEMES
In this report, the delegation will describe principal themes which emerged from our observations, and from conversations with our hosts. Specifically:
(1) The delegation left the People's Republic of China with a sense that what we have termed a "new realism" that encompasses all aspects of China's life-its politics, social institutions, economy, and educational facilities.
(2) The rhetoric of the past has been moderated, if not eliminated. Mao's "little red book" was not in evidence, and the only theme repeated consistently was the injunction of Chairman Mao to "Let 100 powers bloom, let 100 schools of thought contend." During the mission, we perceived that this rallying cry of the 1950's had been rehabilitated to set the tone for a new atmosphere, one the Chinese hoped would stimulate a freer flow of creative ideas and initiatives. Such a renewed flow was seen by China's leaders as a way to break the ideological straitjacket of the Cultural Revolution, and the rule of the "Gang of Four," which had paralyzed China for nearly a decade by inhibiting not only popular criticism, but also those officials favoring expertise over ideology, and "seeking truth from facts," rather than dogma.
(3) The delegation felt th at the new realism., and the themes of "Let 100 flowers bloom, let 100 schools of thought contend," also extended to the conduct of China's economic and foreign policy, particularly China's foreign trade, so that China could once again "learn from foreign friends."
(4) The rationale advanced by our hosts to stimulate China's progress in the "Four Modernizations," that is progress in industry, agriculture, science, and defense, was the need to resist what was seen as the worldwide efforts at "hegemony" by the Soviet Union-the
(1)





2
"Polar Bear." The Chinese stated how meaningful progress had been retarded, and the gap between China, the U.S.S.R., and the West had been widened, and how much they had to accelerate progress to meet the challenges of the decades ahead.
(5) For the United States, the Chinese constantly warned against what they termed "the policies of appeasement." They felt the United States was subordinating defense requirements in the face of the real and potential threat posed by the Soviets on an international basis. This is in contrast to past exhortations which centered on the need to concentrate our attention solely in Europe. The Chinese were critical of the United States-Soviet SALT talks, and other efforts at pursuing "detente." They also warned against "feeding chocolates to the Polar Bear," a colorful expression used to ridicule Western pursuit of trade and technological exchange with the Soviet Union.
(6) In contrast to the past several years, the tone of statements about the Republic of China (Taiwan) and particularly the Kuomintang, seemed deliberately low key. The possibility of the PRC's coming to an accommodation with the leaders of the KMT was raised as having two historical precedents; therefore, we were told "since there has already been cooperation with the Kuomintang twice, can you rule it out the third time?"
(7) The leaders of the People's Republic of China made it clear they wished to normalize relations with the United States. [Throughout this report, "normalization" will be defined as that process including or culminating in an exchange of ambassadors between Washington and Peking.] But at the same time, People's Republic of China leaders repeated their past insistence on American acceptance of the "three pcints" regarding the Republic of China (Taiwan). [By the "three points," the United States would be required to withdraw diplomatic recognition of the Republic of China, cancel the Mutual Defense Treaty with the Republic of China, and withdraw all U.S. troops from Taiwan.
(8) In return for U.S. recognition of the People's Republic of China as the government of all of China, the delegation was told that leaders in Peking were prepared to discuss what they termed the "political realities" and the "modalities" of a continued American relationship with the people of Taiwan. The so-called "Japanese Formula" I was cited as one possible model for postnormalization relations between the United States and Taiwan. Steadfastly refusing to make any commitments on a peaceful settlement of the Taiwan question, PRC leaders stressed they would do their best to create conditions to solve this question by peaceful means.
The delegation has entitled this report "A New Realism: Factfinding Mission to the People's Republic of China" to describe what it perceives as a new realism on China's part. However, we also seek to indicate that an opportunity exists for a new realism on the part of U.S. policyimakeris.
SThe "Japinese Formula" is the term used to describe the process whereby in 1972 the Goveriiment (of J111a1t formnally v teriitil ted iall olici:ial relations with the Republic of China ITaiiwan: i upon exchanging anmilmssadors with the People's Republic of China. The .Japanese r''Ilaced their euli h ssy in Taipei with a "private" trade office, which in effect issues visas, and eanrrie~ out iall the duties necessary to facilitate ai continued social and economic relationship between Japan and Talwan. Unlike the United States, Japan had no formal defense relationship with the Republic of China (Taiwan).





3

KEY QUESTIONS
Our consensus on this matter should not be interpreted as a blanIket endorsement of all that we were told, or all that we were expected to see in China. Far from it. Delegation members emerged from the
People's Republic with many questions stemming from their experiences. Among them:
(1) Are the current trends we report in China deep-seate1, or are there likely to be new upheavals, similar to the many changes- which have kept the People's Republic of China in political turmoil for 20 years?
(2) Is the "new realism" and its possible application to the Taiwan situation merely a ploy on the part of China's leadership, designed for external, and particularly United States, consumption? Or, is it a genuine effort to explore new approaches that recognize the past and present relationship of the United States and the Republic of China (Taiwan)?
(3) Does the apparent opening for negotiation on Taiwan perceived by the delegation exist because of China's domestic needs for modernization?
(4) Can the United States help keep the People's Republic of China in its current posture by helping China to meet her domestic needs?
(5) Even if the changes now underway in China take root, what guarantees are there that they will continue across-the-board, particularly regarding China's attitude toward the United States?
(6) Will cooperation in meeting China's strategic goals reap dividends for the United States? If so, what dividends?
(7) Do the possible risks of helping the Chinese meet their strategic goals outweigh the possible benefits for the United States?
(8) Can a relationship, based primarily on perception of a common adversary (the U.S.S.R.) endure?
We recognize that there can be no "10-day experts" on any country, much less a land as vast and as complicated as the People's Republic of China. But the background available to the delegation in the form of the work of the subcommittee over several years, and the excellent briefings received prior to the mission, have given us confidence that we can report accurately on what we saw and heard.

REPORT SEQUENCE
The above summarizes the principal observations of the delegation. The section which follows details the delegation's conclusions and recommendations. In subsequent sections, the delegation's full report is presented, followed by individual members' reports, and conversations with leaders of the People's Republic of China, including Vice Premier Teng Hsiao-ping. Following the conversations, detailed sections on various aspects of PRC policy are included as supplementary analyses in order to help place into an overall context the findings and recommendations of the delegation. Finally, the appendix contains press reports, PRC position papers, and other items designed to serve as backup material to the report.













DELEGATION CONCLUSIONS
Before presenting our principal recommendations, the delegation wishes to summarize the conclusions which lead to the recommendations. They are: THE NORMALIZATION PROCESS

(1) The direct statements and cumulative impressions received by the delegation are evidence of a clearly positive outlook on normalization by China's leadership.
-At formal meetings and informal gatherings throw hout our visit,
the delegation was repeatedly told that normalization was a desirable -goal and that it was hoped that our visit would help
facilitate normalization.
-Economic and strategic advantages to both sides were consistently
cited by our Chinese hosts as the fruits of normalization.
(2) The delegation believes that if the normalization process is pursued, the positive outlook it perceives can extend to negotiations on the modalities of normalization in an atmosphere of respect for the positions of the parties involved.
-Explicit Chinese statements about the potentially negotiable nature of what were termed the realities and modalities of the U.S.
relationship with Taiwan led the delegation to feel that the "greyarea necessary for compromise between the hard positions of
each side might be located by negotiation.
-The delegation feels that the positive outlook stems from an increasing perception by the PRC leadership of economic, strategic, and political interests which both governments have in common.
-The treaty of peace and friendship, and the long-term trade
agreements negotiated in 1978 between Japan and the People's republic of China are of interest as potential guideposts for the
future.
THEREPUBLIC OF CHINA (TAIWAN)
(1) The delegation notes the existence and the importance of the Mutual Defense Treaty between the United States and the ROC.
(2) The delegation considers that conversations with. the PRC's leaders regarding Taiwan and the Kuomintang represent a potential opening, and therefore, in the context of an official U.S. congressional mission, a new opening.
-Considering its source, the delegation recognizes the importance
of the remark that cooperation between the Communists and the KMT could not be ruled out because twice, prior to 1949, the
KMT and the Communists had operated.
-We recognize that the PRC has raised the possibility of negotiations with the ROC several times since 1949. However, we believe that the significant difference in 1978 is the tone and context of the discussion, and that domestic PRC policies of pragmatism and modernization reinforce the foreign policy and Taiwan
initiatives.






6

(3) The delegation concludes that the possibilities for negotiations relative to Taiwan, with genuine respect for the positions of all parties, appear more favorable now than at any time in the past 20 years.
-We note such instances as the 1955-56 offers by then-Premier
Chou En-lai to negotiate a peaceful settlement of United StatesChina differences in the Taiwan Straits.
-We question whether inaction in the present, or opting for
the status quo, will help perpetuate the presently favorable
atmosphere.
(4) The delegation understands the "three points" of the PRC regarding a peaceful settlement of the future of Taiwan.
-At the same time, the delegation states its support of the
position that the future well-being of the people of Taiwan, and the question of stability in the region, are related, and that they
rest on maintenance of peace in the region.
(5) The delegation wishes to state its concern that the resort to force by parties on either side of the Taiwan Strait would jeopardize .stability in the region, and should prompt reassessment by the United States of its relationship with any party initiating violence.
-We believe that any invitation to a third party to active involvement in the question of Taiwan's future would itself jeopardize stability in the region, and should prompt reassessment of the U.S. position regarding any party involved in such an invitation.

FOREIGN AFFAIRS
(1) The People's Republic of China now perceives the Soviet Union to be its preeminent threat. This is in contrast to the past, when the United States was seen as an equal, if not greater, enemy.
-The Chinese now state that the Soviets are a direct threat to
China, and not just the West, in contrast with the past, and cite
the Soviet border regions as possible initial areas of conflict.
-China seeks to build an international alliance of common
strategic and political interests against what it terms "Soviet
expansionism," and "hegemony."
-China believes the Soviet Union is attempting to "encircle"
the PRC, but that China can break this encirclement (as she has other encirclements) by pursuing common interests with the United States, the nations of Europe, the Middle East, and
Asia.
-Premier Itua Kuo-feng's mission to Europe, European arms
purchases and economic initiatives, the signing of the Treaty of Peace and Friendship with Japan, and a worldwide p Iattern of (iplomatic visits are all related to China's efforts to counter
what it sees as the Soviet threat.
(2) The PRTC wants the United States and its allies to strengthen opposition to the Soviet Union in each hemisphere of the world.
-Ih ('lhinese no longer emphasize the NATO alliance as the only
biilwark against the [LS.S.R.
-They consider the U.S. roals of pursuing "dItente through the
SA I, agreewlnts, and ncrIeased trade and technIological exchange with the Soviet Uniiion to be a policy of 'appeaseiei-t."






7

-They urge upon the United States and the West a three point
plan of direct political and strategic action to deny the So,' ets the advantages they now enjoy through "dtente" an( exehang's.
The Chinese say their plan would make war between the United States and Russia no longer "imminent," but perhaps "postponable" for as much as 25 years.
DOMESTIC POLICY, TRADE, AND Eco-oMIcS
(1) The PRC is engaged in the "Four Modernizations," an organized campaign to upgrade and modernize all aspects of its educational, scientific, technological, military, and commercial capacities, and has rejected the militant self-reliance policies of the Cultural Revolution.
-The Hua-Teng leadership is attempting to reestablish and carry
to conclusion the initiatives begun under then-Premier Chou En-lai in 1972-74, prior to Chou's death and the rise of the "Gang
of Four."
-In pursuit of these goals, present PRC leadership welcomes
"learning from foreign friends," and emphasizes "seeking truth in
facts," rather than making facts fit ideology.
-As a result, the preeminence of Chairman MIao's sayings and
writings have been increasingly muted in favor of specific statements by the current leadership.
--Mao is now being reinterl)reted, if not redefined, to justify a reexamination of and criticism of past policies, including the policies
of Mao himself.
-Integral to the process of redefining the ideological backin-g- for the
practical policies now being pursued in criticism of the so-called "Gang of Four," led by Mao's wife, Chaino Ching, and also criticism of former defense minister and party vice chairman Lin
Paio, and their supporters.
(2) The PRC is taking active steps to pursue domestic modernization.
-The announced goal of the PRC, involving potential expenditures in excess of $100 billion, is to modernize the nation coinpletely by the year 2000. Steps in this process include such gotils as 80 percent mechanisation of agriculture by 19S0 and 120 major
new industrial projects by 1985.
-Military missions to Western Europe have already explored sales
of more than $1 billion for weapons ranging from jet fighter
engines to antitank missiles.
-Plans have been announced for United States-China, and a Chinaworldwide student exchange program, eventually involving 15,000 to 20,000 students of primarily scientific and technical
subjects.
-A goal of training 800,000 new scientific research and technical
workers by 1985 has been set, thus emphasizing educational reform, and exchanges.
-Large-scale purchases of entire technologies and industries from
Japan, West Germany, Great Britain, and other nations in the vital areas of coal, oil and steel production have been announced,
involving billions of dollars.
(3) The PRC is moving toward full participation in the international economic and financial system in order to pursue its modernization goals.





8

-PRC worldwide trade for the first half of 1978 exceeded by 30 percent trade for the first half of 1977, reaching $19 billion.
-Credit financing, joint production projects, "payback" developments, and direct loans from Japanese banks, have, all been
publicly discussed or announced.
-Long-term trade agreements, such as one with Japan reported to involve $20 b lion, have been announced or are under consideration.
(4) The delegation was told that expanded trade with the United States would be a major fruit of normalization.
-Chinese leaders indicated that the question of frozen assets
stemming from the Communist takeover in 1949 was no longer considered an obstacle, quoting discussions with U.S. offici._ds
in recent years.
-The Chinese said they desired normalization in order to end the
trade restrictions, particularly certain export controls, which have
prevented technological sales in recent years.
_RC leaders indicated that United States-Cbina trade would
increase, even without normalization, because of China's strategic
needs.
-However, Chinese officials indicated that if export restrictions
are not lifted by the United States, they will feel compelled to
develop trade with U.S. competitors.











DELEGATION RECOMMENDATIONS
Based on the findings and conclusions presentedI above, the delegation makes the following principal recommendations:
(1) Thle possible implications of China's "new realism" as it zifrect establishing full diplomatic relations with the United States should, be pursued by the administration in a timely manner.
-It has been nearly 7 years since the signing of the Shanghai
Communique. The question of timing, therefore, is important 'in order that U.S. inaction-or the appearance of inaction-not help induce a return to the more inflexible attitudes of recent
years in China..
(2) An active search for the "grey area" between the fixed positions of both sides on the Taiwan question should be p~ursuedl in light of the presently favorable atmosphere perceived by the delegation.
-The 1955-56 offer to negotiate a treaty with the United States, combined with informal suggestions to the delegation of willingness to consider negotiations with the Kuomintang, would! seemi to constitute the boundaries of a "grey area" which could produce favorable results, so long as a positive attitude continues to exist
between Washington and Peking.
(3) To foster a continued positive attitude on both sides, the United States and the People's Republic of China should encourage and develop increased exchanges of people and views on official, private, and corporate-business levels.
-Such exchanges, particularly when they are designed to increase
trade, are both a stimulus to, and an actual component of, the normalization process. The delegation feels that a growing trade and cultural relationship between China and the United States
can lead to a genuine bond between our two countries.
-Specifically, the delegation now formally recommends what it
has already informally suggested: that the administration send the President's Special Negotiator on Trade at the head of an official trade mission to China to follow up and seek to expand on the initiatives being pursued by private corporations and
organizations.
-The (lelegration urges a realistic and systematic approach to
expanding United States-China relations, particularly in the areas of industrial and scientific exchange, coupled with a caref ul analysis of the estimated returns to the United States and its
interests, particularly in the security area.
(4) The question of normalization should, be based on the common bilateral interests and concerns of the United States and the People's Republic of China.
-The delegation notes that despite their harsh statements concerning Soviet intentions, PRC leaders stressed that normalization
should not be pursued purely as an anti-Soviet measure.
(9)
35-200-78-2






10

-The delegation feels that opposition to the Soviet Union is
inadequate to serve as the foundation for a solid relationshiD between the United States and the People's Republic of China".
(5) The delegation urges upon the administration the necessity of full cooperation with the Congress regarding its normalization Xns and policies.
-The work of the subcommittee and its predecessor (the Future
Foreign Policy Subcommittee) since 1975, including the factfindincr mission of July 1978, has been designed to minimize the possibility of divisive debate (as occurred on the Panama Canal Treaty) because the Congress and the American people are unfamiliar with the history and issues involved in normalization,
including progress, or lack of it.
-In order to avoid unwarranted fears or misunderstandings, the
component parts or packages of the normalization process must be recognized and spelled out, particularly those regarding trade, security, and related questions which will require congressional approval, and which in many cases will require congressional
initiative.
-The delegation recognizes that normalization is a process which
may either begin with, or culminate in, an actual exchange of ambassadors, and that the decision regarding this exchange rests with the Executive, but that its implementation must be a shared
process with the Congress.












DELEGATION REPORT

PURPOSE OF THE 1978 MISSION
The 1978 mission of the Subcommittee on Asian and Pacific Affairs was planned as a followup to the then recently completed fall 1977 hearings on the practical implications of normalization with the PRCO. The delegation desired to see firsthand the effects of changes in China since the fall of the "Gang of Four," the accession to power of Premier Hua, and particularly the influence of Senior Vice Premier Teng Hsiao-ping, whose pragmatism has been his characteristic for the
past 25 years.
In planning the itinerary with the liaison office of the PRC in Washington, D.C., the delegation's purpose was to see an(1 experience within the limitations of a 10-day visit as wide a cross section of China as possible-the people, the culture, the industry, commerce and agriculture, and political leadership.
A number of changes had occurred in China since 1976. The "smashing" of the "Gan' of Four" and the rehabilitation of Teng Hsiao-ping were two key shifts. The delegation wished to assess the extent of impact of the leadership of Premier Hua and Vice Premier Teng.
Furthermore, the delegation felt that the issue of the future of Taiwan, which has served as the principal stumbling block to fulfillment of the policy goals outlined in the Shanghai communique, should be explored in an atmosphere free of the attitudes and rhetoric of the "Gang of Four" and their followers.
On the eve of its departure, the delegation held the general view that for economic, political, and strategic reasons, normalization between the United States and the People's Republic of China was an important question to be addressed.
At the same time, the need to achieve normalization without endangering the well-being of the people of Taiwan remained a parallel concern. In these views, the delegation reflected the opinions of the Congress, the American people, and each administration since 1972.1

BACKGROUND
As background to this report of the 1978 mission, two previous investigations of the PRC will be highlighted:
(1) The 1976 study mission of Chairman Wolff and Republican
Burke ;2
'Opinion poll by Potomac Associates, Inc., Washington, D.C., 1977. Perhaps the most systematic of recent polls on this issue, the Potomac Associates findings mirrored, and have subsequently been reflected in polls by a variety of professional organizations.
2 "United States and China: Future Foreign Policy Directions," Subcommittee on Future Foreign Policy, USGPO, 1976.
(11)





12

(2) The 1975-76, and 1977 series of 14 hearings on normalization with China held by the Subcommittee on Asian and Pacific
Affairs.'
THE 1976 MISSION
The 1978 delegation met and talked with the leaders of a China which was in many ways quite different from the country previously visited by Chairman Wolff and Representative Burke in 1976. At that time, China was in the grip of the now discredited "Gang of Four." In 1976, the previous delegation met with then Senior Vice Premier Chiang Ching-chiao, and heard from Chinese officials at all levels a hard line on self-reliance and isolation from external influences. This determined isolation extended to all of the vital issues surrounding normalization, particularly regarding the Republic of China (Taiwan).
This matter, Representatives Wolff and Burke were told in 1976, was purely China's internal affair, in which no external interference would be permitted or even discussed.
Thus, in contrast with the present, there was very little solace in 1976 for those members who sought recognition by the PRC that the United States might have strong concerns regarding the ultimate destiny of Taiwan and her people.4
The 1976 delegation was told repeatedly that the PRC neither wanted nor needed the outside world. The Soviet Union was then-as it is now-perceived as China's principal enemy. But in 1976, no direct assistance from the West was seen as necessary for China to withstand the threat of the "Polar Bear."
By 1976, the grip of the cultural revolution had passed its peak, but many aspects of Chinese life from universities to factories, from communes to urban apartment complexes, were still captive of the revolution's rhetorical, and political straitjacket. For 10 years, this movement virtually halted the scientific, technical, and educational progress occurring in the West, and which was being enjoyed by many of the PRC's Asian neighbors.
There were some relatively positive aspects. The "Gang of Four" apparently still sought the goal of normalization discussed in the Shanghai communique by Chairman Mao and the then recently d(leceased Premier Chou En-lai. Also, the "Gang of Four" desired at least indirect Western assistance in order to divert Soviet resources to the NATO flank in Europe, thus lessening pressure on the SinoSoviet border.
1977 SUBCOMMITTEE HEARINGS
In September and October 1977, the Subcommittee on Asian and Pacific Affairs held a series of six hearings on the ractical implications of U.S. Government policy since the signing of the Shanghai com1mm111111(le. Ihe (iuestionI pursuedl wais not whether, but when, and how,
S"The United States-Soviet Union-China : The Great Power Triangle," USGOPO, 1976, and "Normalization of Itelations With the People's Republic of China: Practical Implications." US(PO, 1977, hearings held by the Future Foreign Policy Subihommittee, and its suvcessor, the Subcommittee on Asian and Pacific Affairs, House International Relations Coliltit tee.
I In Nwovmber 1976, Representative Fountain, with Representatives Sam Gibbons and Robert Lauornarsino. and thenI-ClhtiMan Thomas E. Moran n of the International Relatins Coriniitter, visited the Republic of China (Taitwan). In their report, entitled "Outlook On The Pur lua st, November 1976," USGPO(, ID)ecemniher 1976, the members urged retaining formal diplomatic and military relations with the ROC.





13

to pursue normalization with the People's Republic of China '~ in terms of the interests of the United States.
These hearings were a followup to the 1975-76 hearings 6 and the 1976 factfinding mission. They highlighted the fact that, no matter what the international economic, political, and strategic situation, the prime concern over the issue of normalization with the PRC revolved .about the question of Taiwan's future, and the many business, technical and legal matters surrounding that issue. Specifically, the 22 witnesses in 1977 testified repeatedly that the key question involved both the intent and present function of the Mutual Defense Treaty, generally regarded for the past 24 years as the only reliable source of international security for the people of Taiwan.7
For example, witnesses favoring continuation of the Mutual Defense Treaty testified that only its protective cover would provide the security that international business concerns required to continue operating in Tfaiwan. It was sugg'estedl by some that the Japanese were able to negotiate their "formula" with Peking precisely because of the
p rtective umbrella of the United States andi its continuing relationship with Taipei.
Given the PRC's theme of self-reliance, and pre-1978 policies regarding credit or long-term financing, witnesses generally felt that with or without normalization, anticipated U.S. trade with China could not be expected to increase substantially. U.S. trade with Asia now exceedls that with Europe. But some witnesses expressed doubt whether U.S.-PRC trade would ever amount to the two-way street enjoyed by the United States and the other nations of Asia.
Some experts on strategic questions testified (luring the 1977 hearings that uncertainty over possible Sino-Soviet rapprochement should serve as a counter to other experts who urged normalization as an anti-Soviet move in the wv-orld arena. Z
In the main, though, those witnesses in favor of normalization with the PRC did so on the basis of specific bilateral concerns between the United States and China. Such witnesses urged that if normalization ,Could be accomplished it should be done in an atmosphere free of actual or implied threats to the Soviet Union.

1978 1*vissioN
During 10 days in July 1978, the delegation traveled some 2,600 miles and visited 4 cities in the People's Republic of China.' Detailed, f rank, and open exchanges were held with Senior Vice Premier Teng Ilsiao-ping, Vice Foreig'n Minister Wang Hai-jun, Mr. Wang Jun Sheng, Vice Minister for Foreign Trade, Ambassador Hao Tehlching, president of the People's Institute for Foreign Affairs, Dr. Chou Pei-yuan, vice president of the Academy of Sciences and president of Peking University, and many other individuals who gave generously of their hospitality, time, and views.
Since the 1976 visit by Chairman Wolff and Representative Burke, many new faces had appeared in Peking. As noted, the "Gang of Four" had been "smashed," and Teng Hsiao-ping had been rehabilitated for
5 "Normalization of Relations With the People's Republic of China: Practical Impitations," hearings before Subcommittee on Asian and Pacific Affairs, US(GPO (1977).
6 "The United States-Soviet Union-China: The Great Power Triangle," Subcommittee on Future Foreign Policy, USGPO (19)76).
'7 Summarized testimony from each hearing appears in the appendix.
8 e appendix A for itinerary.





14

the second time, now sharing power with Chairman Mao's handpicked successor, Premier Hua. But the changes the delegation both witnessed and sensed as being under debate appeared far deeper than simple shifts in the corridors of power in Peking.
The delegation came out of China with both individual impressions and factual findings which cast light on the key concerns of the American people regarding the normalization question. The resulting distillation of meetings between the delegation and China's leadership should help illuminate many of the questions raised by the subcommittee in 14 hearings over the past 3 years.
As noted in the press conference 9 in Hong Kong, just 48 hours after crossing the border from Canton, and as was discussed again with Secretary Vance and Assistant Secretary Holbrooke in Washington. the delegation emerged from the People's Republic of China with the sense that a "new realism" was beginning to assert control of affairs in that great land through the pragmatism of Vice Premier Teng.
Much of what was seen and heard in China was not new in itself. But the tone and context of what the delegation was told and shown quickly built in the delegation a strong sense of the pragmatic hand of Senior Vice Premier Teng in the day-to-day life of China. This was particularly evident in the areas of foreign policy and economic development, which the Chinese now see as closely related.
Certainly no visit of only 10 days could qualify any group as expert on the policies of or events in another nation, especially a society as closed to independent inspection as China. But the delegation had the benefit of considerable background experience, as previously described. Consequently, the delegation feels that what it perceived to be the "new realism" now growing in China will bear close study in the future.
FOREIGN AFFAIRS
It is in the area of foreign affairs that China's "new realism" would appear to have its most obvious roots. It is a convincing rationale for explaining why the leaders of China seem determined to modify-if not turn away from-the policies and strict ideologies of the recent past.
At all levels of discussion on foreign affairs, the need to meet and resist what was termed "Soviet expansionism" was the common theme, and, therefore, the motivation, for China to upgrade her scientific, technical, and military capacities. In this limited sensedefinition of the Soviet Union as the arch foe-China of 1976 and 1978 merge into one. But the differences in approach in 1978, both at home and abroad, are striking, and warrant closer scrutiny.
In general, the delegation emerged from China with a definite sense of the critical strategic and political problems facing the People's Republic of ('hina in the form of the Soviet Union-the "Polar Bear"n-and what the Chinese labeled the Soviet Union's "Asian Cuba," Vietnam.
NOILMAI ZATION URGED
However, on the basis of its conversations with China's leaders, the delegation feels that while ( 'hina seeks an acceleration of normaliZat lonll with the United States as an integral part of its struggle
Press conference transcript i presented in full in the appendix.





15

against the Soviet Union, the leaders in Peking do not want normalization to be played as "the China card," that is, as an anti-Soviet move. Instead, they stressed repeatedly what they termed the common strategic and political interests of the United Sttes (mnd China.
Thus, they said, the best path to normalization with the Urnited States lay in fostering a climate of mutual understanding an( Cool)eration, particularly in the economic, scientific, and educational fields which are vital to China's modernization plans.
The delegation was informed by the Chinese leadership that the Soviet Union feared two actions by the PRC-normalization with the United States, and conclusion of a treaty of peace and trendshil) with Japan. As this report was written, word of a successful conclusion to the negotiations on a Sino-Japanese peace treaty was released.
The delegation was told that the Soviet Union seeks to bring China to its knees by a policy of encirclement. Further, the Chinese warned, the United States should not be deceived by Soviet attein)ts to "bluff" the West into thinking that the Sino-Soviet split cou(l be healed, so deep are the political and strategic divisions between them. Nor, said the delegation hosts, should the Soviets be allowed to bluff us into thinking that differences between China and the Uni ted States would prompt rapprochement between Moscow and Peking.
DIRECT SOVIET THREAT
Two major developments merit close study, should they continue; first, PRC leaders laid heavy stress on Soviet "encirclement" of China, and second, the Delege tion was told of the threat of a major Soviet attack on China. In the past, Peking had seen Moscow as merely "operating" against China in Asia while actually preparing for allout war against the United States and the NATO alliance. But now, China herself is publicly discussed as a possible first target for the Soviet Union.11
Another subtlety with possibly broad policy implications is that no longer did the delegation hear the old 1976 refrain that war between the Uniited States and the Soviet Union was "imminent." Insteald, the Chinese urged a three-point program of being tough and confident with the Soviets as the best way to resist them.12 If the Unitedl States followed these "three methods," war could be "postponed" for as much as 25 years, if not indefinitely.
The importance of this new line would seem to be that Chinese leaders now recognize that they need time, perhaps as much as 25 years, if they are to progress to a point of being able to compete with the flourishing economies of the West, not to mention the economic and military might of the Soviet Union.
0 Subsequent events included an announcement by Vice Premier Teng that the 1950 Sino-Soviet treaty, which included anti-Japanese references, would not be renewed upon its expiration in 1979.
11 The appendix to this report includes a lengthy article by isu Hsiang-chien, a senior People's Liberation Army official, discussing in much harder terms the full range of Chinese strategic and military thinking, and the conflict between "socialism," "revisionism." and "imperialism." The entire document has been reproduced because of its comprehensive nature, which approaches a virtual "White Paper" on PRC theory and strategy.
1-2 The delegation was urged repeatedly to support the "three methods" of resisting "Soviet expansionism." The three methods:
(1) Make concrete preparations against war; have no illusions.
(2) Upset all Soviet efforts at strategic deployment.
(3) Do not adopt a policy of appeasement toward Russia.





16

It was also clear to the delegation that the Chinese recognize the need for U.S. cooperation, in Europe and Asia, principally, but also in Africa and the Middle East, in order to stem what they see as the tide of "Soviet expansionism." The Chinese repeatedly sketched a world map showing Soviet activity-and gains-from Cuba to Africa, up to the Middle East via South Yemen, into Afghanistan, and across to Vietnam.
Again and again, the delegation was told that the Chinese consider the policy of pursuing detentee" with the Soviet Union to be an illusion, and that the United States is actually following a policy of "appeasement." As noted by Ambassador Hao, and others, the Chinese saw no utility in the SALT talks, and even opposed "feeding the Polar Bear chocolates" in the form of increased trade and technological exchange.
THE REPUBLIC OF CHINA (TAIWAN)
While many issues were discussed, the question of Taiwan-to date, the primary question in the U.S. debate on normalization-is perhaps the key area where the delegation felt a potentially important example of the "new realism" was being applied by China's leaders.
The basic Chinese position regarding the need for U.S. adherence to the principles of the Shanghai communique, and to the "three points"-(1) ending formal recognition of the Republic of China (Taiwan); (2) abrogating the Mutual Defense Treaty between the United States and the Republic of China; and (3) withdrawing all U.S. forces from Taiwan-has not altered. However, the delegation sensed a new realism in terms of an emphasis on seeking ways to settle the Taiwan question on a strictly bilateral basis, between the 'Chinese themselves.
In this regard, and in contrast to 1976, the talk was not in terms of harsh rhetoric about the rulers of Taiwan, or thinly veiled hints about ultimate resorts to force. Rather, the delegation perceived a growing C(-hinese willingness to discuss Taiwan's future even with officials of of the Kuomintang, on the basis of what were termed existing realities.
NO RANCOR
The delegation was even informed that Chiang Ching Kuo, President of the Republic of China (Taiwan), had been a "classmate" of senior PRC officials. No rancor toward Taipei's leaders was manifested on a personal level during the delegation's talks. Historical instances of KiMT-Communist "cooperation" were discussed not once in pass1g, but were specifically raised twice, with the comment, can you rule it out a third time? In addition to these potentially favorable references to the KMT-unprecedented in any previous conversations with PRC leaders-conversations with senior Chinese officials heard repeated references to recognition of the "realities" of the U.S. involvement on Taiwan. The (Ielegation was tohl that within the context of the Shanghai communique, the "modalities" of normalization were negotiable.
Linking these thoughts to the stated willingness of the Chinese to necept the so-called "Japanese Formula" of trade and economic ties, but without formal diplomatic recognition of Taiwan as the government of China, the delegation felt that a clear pattern of willingness






17

to discuss Taiwan with the United States was being exhibited1. The striking contrast between 1976 and 1978, is that ini the past, any sort of discussion on Traiwvan had been ruled out on the basis that it Was solely China's "internal affair."~
SHIFT ON TAIWAN
That a shift has occurred would seem borne out by the fact that in the preceding 6 months, similar pronouncements had been made to, other delegations.
(1) In December 1977, for example, Party Chairman Yeh Chien-yingr noted that China is relying, as he put it, on the people of rITaia to liberate themselves. While not ruling out the possible use of force, Yeh's statement would seem to move away from discussing force in any provocative way. 1
(2) In January, Ambassador Hao told the mission led by Senator Cranston and Representative Whalen that China recognized what were termed domestic "Problems" in the United States with respect to Taiwan.'14
(3) In April of this year, a lead article in a Peking daily quoted the late Chou En-lai's desire for peaceful liberation of rraiwan.l5
(4) Finally, the friendly tone of the conversattions held by the delegation were anticipated by Chairman Yeh in May, when he greeted a visiting delegation of former American Foreign Service officers,'" and called f or "peacef ul and friendly cooperation between China and t h e United States," particularly on the normalization question.
It was within this context that the delegation heard repeated references by the Chinese to past cooperation with the Kuomintang'-. Thie, historical f act was raised that twice in the past the Chinese Communist Party and the Kuomintang had come together and cooperated when it was in their common interest: First, during the time of Dr. Sun Yat Sen and the Northern Expedition against the 01(1 warlords, and also, against the Japanese to achieve liberation before and during World War II.
PEACE OFFER
As observers have pointed out since the delegation '5 return, since 1949, the Chinese have sent several signals on wNillingness to negotiate the Taiwan question. One of the more explicit examples would seem to be of some potential relevance:
In 1955-56, at the height of the Eisenhower-Dulles policy of "containment" against "Red China," Peking made repeated public efforts, to bring the United States to the negotiating table. Peking even offered the prospect of a treaty specifically calling for peaceful settlement of' the Taiwan issue in terms of United States-China bilateral relationsThen-Secretary of State John Foster Dulles rejected the Chinese, initiatives, although several talks were held in Geneva.
The language of the PRC during this peiriodl is of interest today. Forexample, on March 4, 1956, the Foreign Ministry in Peking issued a statement including this clause:
23 Yeh's remarks in a speech to the Chinese People's Political Consultative Conference on Dec. 27, 1977, were replayed In Foreign Broadcast Information Service Daily Report, People's Republic of China, Dec. 29. 1977, pp. El-tE6
14 "The United States and the People's Republic of China," Joint House-Senate report,, USGPO, May 1978.
15 Kwangming Daily, Apr. 10, 1978, replayed In Foreign Broadcast Information ServiceDaily Report, People's Republic of China, Apr. 26, 1978, pp. E8-E12.
16 New China News Agency, May' 19, 1978, replayed In Foreign Broadcast Information, Service Daily'Report, People's Republic of China, May 22, 1978, pp. A6-A*7.






18
(The Chinese side) put forward as early as September, 1955, the proposal for a Sino-American Conference of Foreign Ministers to settle the question of relating and eliminating tension (between the United States and China) in the Taiwan area. It did not oppose the American proposal for issuing an announcement of renunciation of force by both sides. [Italic supplied.]
Three paragraphs later, the Foreign Ministry statement repeats the same theme, this time actively endorsing the U.S. position, saying,
China and the United States should settle disputes between the two countries by peaceful means without resorting to the threat or use of force, and that in order to realize this common desire, a Sino-American Conference of Foreign Ministers should be held to settle through negotiation the question of relaxing and eliminating tension in the Taiwan area. [Italic supplied.]
The Foreign Ministry statement later credits with the inspiration for this initiative then-Premier Chou En-lai. In an April 1955 speech at the Bandung Conference, Chou proposed, that China and the United States should sit down and enter into negotiations.
* * (the Premier) stated definitely that the aim of the negotiations should be to settle through negotiation the question of relaxing and eliminating tension in the Taiwan area. [Italic supplied.]
In 1955-56, the Chinese were serious, it is now agreed. The possibility of a 1978 ploy on the Chinese part, is, of course, present. But the preponderance of evidence available to the delegation would seem to indicate a general pattern in line with China's historical practice. In 1955-56 the United States was China's "encircler." In 1978, the Chinese see the Soviet Union in this role. In 1955-56, the Soviet Union was even then backing off its support of China. In both 1955-56, and 1978, the response of the leadership in Peking to outside pressure has been to seek to alleviate it by improved relations with the United States. In 1978, improvement is the stated policy of the U.S. Government, and has been since the signing of the Shanghai communique in 1972.7
It goes without saying that the events of 25 years ago cannot be uncritically resurrected today. Further, in 1955-56, as in 1978, Peking was very clear on the issue of "sovereignty" over Taiwan. Premier Chou's offers were carefully couched to clearly separate United States-People's Republic of China from United States-Republic of China (Taiwan) and Peking-Taipei relations.
1978 CONTEXT
The point here is that indications of possible openings on Taiwan during the delegation's August visit-friendly references to Chiang ('lhing-KLIuo, and talk of past coopl)eration with the KMT-came in the context of meeting with an official U.S. congressional delegation. While clinging to the "soverignty" issue as a shield against specific statelllmentls on a peaceful settlement on Taiwan, the fact remains that key PR leaders told the d(lelegation "we will do our best to create condit itons to solve this questionn by peaceful means." There was obvious recognition by the ('1hiese of the domestic United States and internt ional "au(Idience'" which would receive the delegation's report.
EDUCATION, FORiEIGN TRADE, AND DOMIESTIc GROWTH
The delegalion's general perception of China's "new reality" was reinforced by visits to educational facilities, cultural events and
17 For contemporary discussion of the 1955-56 Chinese offer, see "Toward Sino-American Reconciliation" by Dr. Robert G. Sutter, Johns Hopkins University Press, 1978.






19

institutions, and factories. At locations ranging from Peking University to a technical university in rural Shensi Province, teachers and officials repeated the same themnes; that, the damtige (lone by 10 years of stagnation during the cultural revolution and solidified by the extremes of the "Gang of Four," had set China back years in scientific and technical education an( research, and seriously retardled industrial product ion, modIernlization, andl economic troNXvt .
The prinlcip~al difference between 1976 and 1978 ris that now the Chinese have recognized that placing ideology ahead of practice has retarded progress. They were frank in their willingness to open up to Western scientific technology and training to enhance, if not replace, Chinese technology. tyt
TRUTH IN FACTS
This does not to imply that ideology has been abandoned. But the Chinese made it clear that a return to practice, a return to professionalism, will be the key determining factor in determining who is "red and expert." They now want to "seek truth in facts," a well-know-n saying of Vice Premier Teng aimed directly at what the Chinese press calls "what everism," a wry swipe at proponents of the view that whateverr Mao said or wr~ote is correct."
That there is an emergringr Chinese pragmatism, particularly in the field of education, would seem to be clear. In January, for example, Dr. Chou Pei-yuan, vice president of the Academy of Science and president of Peking University, told the Cranston-Whalen delegation that there would be no possibility of United States-China exchanges until after normalization.
.But in March, Dr. Chou joined with Vice Premier Teng in announcing the 1985 goal of training 800,000 new research personnel. Surely 'it was no accident that the President's White House science advisers were in Peking at the same time as the Wolff delegation, or that Dr. Chou and other officials subsequently announced an extensive, new student exchange program.
Dr. Chou was very frank in his conversation with the delegation on the need1 to upgrade China's educational system from top to bottom. Clearly, the Chinese realize they can-not hope to achieve these goals without cooperation from the West.
At the university level, ranks for professors grades for students, and entrance exams for prospective students have already been restored, although only in the past 6 months. The Chinese were open in their hopeful, if not skeptical appraisal of the benefits of the "new realism" for China's renewed progress.
The Chinese are now instituting wage incentives, restoring rank in the military, and using other methods to spur discipline, efficiency, and greater production.
It is precisely changes of this nature which were advocated by Teng Hsiao-ping and his followers prior to their purge by the "Gang of Four." The future of these changes is still not certain.
While the role of ideology and rhetoric should not be undlerplayed, the only rhetoric heard consistently throughout the visit was the 01l1 injunction of Chairman Mao to "Let 100 flowers bloom, let 100 schools of thought contend." This mild-sounding exhortation, if allowed to flourish, contains the seeds for a far-reaching revolution in China's administrative style and policy. The delegation was





20

consistently told that this old rallying call of the 1950's had been resurrected to permit constructive expression of thought and ideas in order to stimulate the progress which the Chinese frankly admit they must make. (The fate of the 1950's campaign, sometimes characterized as China's "Prague Spring," was not discussed.)
FOREIGN TRADE
The Chinese now state that foreign trade is an important part of the domestic expansion program which they have adopted for the future. Wang Jun-sheng, Vice Minister for Foreign Trade, made clear his government's desire that obstacles to export licenses for certain types of U.S. technology be removed "in the spirit of the Shanghai Communique." The Minister dismissed as "not an important problem" the longstanding issue of frozen assets, and predicted that after a 2-year decline, United States-China trade would increase this year. However, the Minister stressed repeatedly that trade restrictions exist in the form of the CoCom agreements,s and certain export license denials on technology with potential military applications. China would look elsewhere for trade if U.S. restrictions are not lifted, he added.

U.S. TRADE MISSION
In return, the delegation suggested that the time was ripe for greater official U.S. trade consultations with China, and discussed the need for sending a trade mission equivalent to the White House science adviser's group which was in Peking at the same time as the delegation
Subcommittee Chairman Wolff raised the possibility of joint ventures between Chinese and American companies which could employ the technology and expertise which are presently blocked by export license restrictions not necessarily aimed at China in the first place.
Minister Wang candidly stated the new Chinese policy to pursue modernization with outside help, "to learn from foreign friends," where necessary. He then added the thought, "It is certain that a powerful China will be of benefit to the United States in a threat. This is in your strategic interest."
The discussion then focused on oil exploration, and the Minister noted that "a number of U.S. companies have (recently) come to China to exchange views." It should be noted that while our delegation's conversation with the Minister was similar in tone to that held by the Cranston-WVhalen mission in January; namely, that trade would have to wait for normalization-the fact was that the Chinese had spent the past 6 months seeking U.S. technology, particularly in the oil and energy field.

U.S. BUSINESSMEN
Stavu iete ek*
StaVing in the Peking IoItel at the same time na the delezation were representatives from several major U.S. oil companies. lThe details of their plans for mutual cooperation with China subsequently
4 'n m" for "eordinating winimitieo." is n f1 rmal pr -ed urIe designed to block export of stra tegic technology to a Communist nation without the approval of all of the 15 nembiers. the Uniteid States, Japan. and the NATO nations excluding Iceland. France is not a member of CoCom. and in n)ctober. a proposed $350 million sale of antiaircraft and antitank weapons from France to the PRC was revealed.





21

appeared in the press.19 Of particular interest to the delegation was the indication that the Chinese were now prepared to enter ito proIuction-sharing agreements with the U.S. comnites, and that the concept of profit-sharing has apparently not been ruled out.
While in Peking, delegation members and stafl met informally with U.S. business executives. These conversations reinforce( the perception of China's new pragmatism. The businessmen reported that 18 months ago their contact with midlevel Chinese officials had produced
-only generalities, and dicussion of technical manuals or prototypes.
But this year, said the businessmen, the same mi(level officials were authorized to engage in price negotiations on packages of equipment with potential sales in the millions of dollars.
The businessmen reported discussions involving agricultural training programs in which U.S. technicians would be supplied for a fee, and in what may rerpesent a major shift from past policy, the Chinese indicated an appreciation of cost and profit centers in negotiating with the foreign companies.
In the delegation's meeting with Vice Foreign Trade Minister Wanc, the Minister said that since the signing of the Shanghai communique in 1972, China's policy has been to develop trade "on the basis of equality and mutual benefit." Conceding that the "Gang of Four" hindered implementation of this policy, Minister Wang said "we have now entered into a new epoch of construction, and we have a greater need to develop international trade and to expand trade. We need to import commodities in large quantities, and at the same time we need to increase our exports."
Citing "consumer goods" and "light industrial products" as immediate possibilities, Minister Wang added "* * some minerals and metals. Also, if we develop our oil production, we could possibly supply some oil to you."
It seemed to some members of the delegation that China had enbarked on a policy of using oil exploration as a pilot project in cooperation with foreign business firms, as well as international financial institutions.
In the interval since our mission, the trends we perceived have solidified into a solid stream of hard policy being implemented by Feking, ranging from oil and arms deals, to massive tourist hotel projects.

SUPPLEMENTAL STATEMENT OF REPRESENTATIVE L. H. FOUNTAIN
While I am in general agreement with the recommendations of the delegation, I want to take this opportunity also to reaffirm my longstanding interest in maintaining cordial relations with our historic friend and ally, the Republic of China. As I have stated on past occasions, i favor continued diplomatic recognition of the Republic of China and preservation of the Mutual Defense Treaty. I oppose sacrificing Taiwan as the price of achieving normalization with Peking, and hope that it will be possible to move toward full diplomatic relations with the PRC without impairing our historical friendship with the ROC.
19 Washington Post article "China's Oil" by Hobart Rowen, Aug. 11, 197S.














CONVERSATIONS WITH PRC OFFICIALS
MEETING WITH SENIOR PRO OFFICIALS INCLUDING VICE PREMIER
TENG USIAO-PING, VICE FOREIGN MINISTER 'WANG II1AI-JUN, ANT) AMBASSADOR HAG TEH-CHING, PEKING, GREAT IIALL OF THE
PEOPLE, SUNDAY, JULY 9, 1978, 10 A.11.
The 1 -hour-and-4 5-minute conference opened with Ch airm an WiXoliff and Vice Premier Teng discussing the 1976 visit to Pekingz by Mr. Wolff and Representative Burke, and the differences between that visit and the present.
On the Chinese side, the thought was expressed that such visits were useful and that an exchange of views, even where they dliffered, was important. "Mutual understanding between us is better than no understanding at all, commented one participant.
The cordial nature of the delegation's discussions were reflected in an exchange between Chairman Wolff, Representative Rangel, and the Chinese officials present. One official commented on his own military experience, and noted that delegation members had also, seen military service.
Representative Rangel said "Some of us prefer to forget our military experience, such as in Korea." The response, amid laughter, came back, "You should not forget completely." Representative Rangel, noting he had been wounded and sent back to the United States shortly after reaching the Yalu River, said "Completely forgetting is impossible." The Chinese response, bantering in nature, was "It is better to forget certain matters like the advance of U.S. troops to the Yalu River. These matters are better to forget. But," the reply took on an earnest tone, "the military question is still a very real one."
Discussion moved swiftly to the military situation in Asia, and a discussion of the two administration visits to Peking, that of Secretary Vance in August 1977, and National Security Adviser Brzezinski in 1978.
RECENT VISITS
Representative Wolff said "We came here to help find ways and means of how we, as nations and people, can come together. I think there are more areas we can agree upon than there are areas 'of disagreements." Turning to the issue of PRC criticism of Secretary Vance following post-mission reports of Chinese flexibility on the Taiwan question, Representative Wolff noted that Mr. Brzezinski's visit produced no such negative appraisal on the part of the PRO. "Do you think that the Brzezinski visit represented progress in our relations which exceeded that of the visit by Secretary Vance? What are the areas we can pursue more closely as a result of our trip?"
(23)





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During the discussion of these questions, the Chinese side expressed the view that the results of both the Vance and Brzezinski vists were the same in terms of the U.S. commitment to normalization within the framework of the Shanghai communique. The thought was expressed that normalization depends on efforts by both sides. The only area of disagreement from Secretary Vance's visit was described by Chinese officials as stemming from statements on "flexibility" regarding the principles of the Shanghai communique. These statements, according to the Chinese, were "incorrect."
The only difference between China and the United States, the conversation indicated, was the question of Taiwan. While the officials indicated that the firm Peking position on sovereignty remains China's policy, the comment was made that despite the difficulties of the Taiwan question, it remains a question which can be "talked out" between China and the United States.
SOVIET UNION
The discussion shifted to the interests seen by the Chinese as common in United States-China relations, specifically, coordinating action to meet the challenge of the Soviet Union. "I believe we as well as you will have a more active attitude toward settling the question of normalization of relations. There is a need for this because there are compelling circumstances," commented one official.
The Chinese officials indicated that the Soviet Union constitutes the compelling issue in United States-People's Republic of China pursuit of normalization. Soviet activity in Africa, the Middle East, the subcontinent and in Southeast Asia was mentioned as posing a common threat to both Chinese and United States interests.
The Chinese indicated that conversations with Dr. Brzezinski and Secretary Vance had discussed this view.
The then-pending Treaty of Peace and Friendship between China and Japan was noted as a key part of the anti-Soviet effort. Normalization with the United States was jointly mentioned as an important step in this regard.
It was noted that Foreign Minister Huang Hua had intended to discuss these issues with President Carter at the United Nations earlier this year. The officials indicated that they had planned to stress that they see normalization primarily as a political issue, rather than a question of diplomacy. The normalization question must be handled "in light of the overall international situation and in a strategic perspective," the Chinese indicated.
The comment was made that despite the areas of agreement explored in the Vance-Brzezinski visits, and the mutual desire for progress toward normalization, "there was no substantial result of these visits."
NORMALIZATION
Representative Wolff asked(l, "I wonder if you could tell us how you (list1 lish hetweei the political+' ind diplomaticic; des it mean that we can proceed immediately to polite le! norml ization, and allow
(i)1lo11mat iC 1101 1nor 1aliza ion11 to )roC(eedi at its Own p te?"
The (I'hinese replied that they waNtited~ i il lit.l States "to take 11t01a action" on n01ormalization, but did lo(t sl)ecilically res)ondl to





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the difference between "Politics" and "diplomacy," other than to say that "in diplomacy there is a lot of empty talk." They said that they saw ((action" as the key to differentiating political from diplomatic activity, but did not indicate whether they saw political normalization as being separable from diplomatic normalization.
Representative Wolff noted the apparent contradiction raised by the fact that both China and the United States have full diplomatic relations with the Soviet Union, but not with each other. Further, the paradox is deepened by the fact that both China and the United States share the Soviet Union as a common adversary.
In reply, the idea was raised that the two actions "the Russians fear the most are normalization between China and the United States, and successful conclusion to the Chinese-Japanese Treaty of Peace and Friendship. They are doing their utmost to obstruct these two things." On Taiwan, the discussion repeated the consistent theme that "there is no room for flexibility" on the principle of Chinese sovereignty, but added the contention that the "specific modalities" of the Taiwan question can be matters for United States-Chinese consultation. "The only obstacle between us is the issue of Taiwan."
Representative Wolff indicated that the discussion was following the line already agreed upon in the Shanghai communique regarding "'internal affairs," and asked the officials if they had any comment on the realistic application of the so-called "Japanese Formula" to any projected U.S. relationship with Taiwan after normalization with Pekine. He also indicated that many Americans feel the "Japanese Form- Ia" does not really cover the reality of U.S. interests in Taiwan.
In the discussion which followed, the Chinese officials indicated that they felt the "Japanese Formula" represented a major concession.by them in terms of the sovereignty issue, but that it was a concession they were willing to make in light of the common interest in meeting the Soviet threat. "If you look at the question from the political and strategic point of view, it is in the great interest of us both in dealing with the Soviet Union if we can normalize relations," an official said.
TAIWAN CONTACTS
Representative de la Garza then asked if "there is any effort being made by your government, aside from the question of relations with the United States, any effort of a non-military nature to unify Taiwan with the mainland? Do you have any direct contacts with the people of Taiwan?"
In the discussion which followed, Chinese officials indicated that "so far there are no official contacts," but that longstanding personal or private acquaintanceships exist. "In fact," said one official, "Chiang Ching-kuo was my classmate."
Representative de la Garza followed with the question "Wouldn't it be-easie'r if brothers on Taiwan and on the Mainland could get together themselves and not depend on the attitude of the United States?"
Discussion of this question centered on two points: The historical fact was raised that twice in the past the Kuomintang and the Communist Party had cooperated, first under Dr. Sun Yat-sen against the northern warlords, and second against the Japanese in World War 11. "Since there has already been cooperation with the Kuomintancr twice, can you rule it out the third time?", replied one official.
35-200-78--3





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ROLE OF THE UNITED STATES
The second major point raised during the discussion of Mr. de la Garza's query centered on the role of the United States in the Taiwan question. "We have often said to Americans that in our efforts to reunify the Motherland, we will respect realities, and that we can be flexible in the means of settlement. In this context, I am sure that it will be possible to find a settlement satisfactory to all," commented an official.
Representative Fountain discussed the nature of the U.S. system of checks and balances between the executive and the legislative branches, adding that both branches represent the American people. "I hope you understand that while we are moving toward normalization, we would like to move at the same time in other areas such as the exchange of visits. You said that the one thing 'the Polar Bear' feared most was normalization. What would be the impact on Russia of normalization between the United States and the People's Republic of China, and siring of a treaty of mutual friendship and solidarity between us?"
In the discussion which followed, it was indicated that the Chinese feel that normalizaton would cause the Soviet Union to move more cautiously in world affairs. The official added the thought that "if relations between our two countries are normalized the Soviet Union must be more cautious strategically."
"The formalities of normalization are not important, whether to have a treaty or not. The realities of normalization will speak loudly." However, thle officials indicated, China had no desire to be "played" as an anti-Soviet pawn. The Soviet interest was seen as separating China from the United States so as to allow Russia to deal separately with Europe, Japan, and the United States.

SOVIET BLUFF
In this regard, the officials indicated that the possibility of SinoSoviet reconciliation was simply a "bluff" on the part of the Soviets, and that the United States should be on guard in the wake of heightened Soviet activity in Afghanistan and Vietnam. In particular, it was indicated, the Soviet's suggested "collective security" plan for Asia is a tipoff to their intentions. The Chinese indicated their feeling that the nations of South East Asia, particularly the ASEAN economic grouping, were wary of this Soviet activity, and that they shared the Chinese perception of Vietnam as a stalking horse for the Soviet Union.
In enlarging on this theme, discussion indicated that the Chinese perceive the Soviet activity, particularly in Asia, as part of an "encirclement" campaign aimed at them. However, the officials indicated( confidencee that any such encirclement could be broken. A warning to the United States was added, particularly regarding what the officials saw as increased Soviet military activity within Vietnam.

VIETNAM
Representative Wolff noted that Vietnam represented a potential threat to the region, as well as to (China.
In the discussion which followed, the Chinese indicated they view Vietnam, "the (Cuba of the East," as a potential threat to more than





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just Southeast Asia, because of the Soviets' worldwide activity '~1n plans and Vietnam's strategic position. Regar(ing the current crisis in Chinese-Vietnamese relations, it was in(licate(l that tle (hinese officials felt their country ha(d shown great restraint )rior to the eventual brea.tkdown. "Only after Vietnam took 10 stepl)s, when it was taking the 11th step, then China began to take its first st(,p."

TAIWAN S FUTURE
Mr. Burke brought the discussion back to the question of Taiwn: "I accept the fact that both countries are interested in norminalization of relations. I would like to ask three questions: First, if the Taiwan question remains unresolve(ld, how long will it be before you take action to reunifylv Taiwan with China? Secomi, ii we withdraw our troops, what is the future for the anti-PR(' people who live on Taiwan? Third, if we withdraw -our commitments, woul(in't the anti-PR(' people negotiate with the Soviet UJnion and thus create an even
Greater problem for all of us than if we negotiate normalization of relations, and work out our differences later?"
In the discussion which followed, the commitment of the PR(' to the "three conditions" was restated, as was the history of two I)5-st instances of cooperation between the Communist Party and Kuomintang. Also restated was the recognition by the PRO of the "realities" of the Taiwan question. "We believe that we Chinese can find a way to realize reunification of the island. In seeking ways to solve the question we will face realities."
Discussion of the issue of Chinese renunciation or the use of force repeated the impossibility of such a commitment, from the Peking standpoint, because of the sovereignty issue. The added thought was raised that, paradoxically, such a commitment might actually make a peaceful settlement more difficult. On China's part, it nwas said, "we cannot undertake any commitment as to how to achieve the liberation of Taiwan, but we will do our best to create conditions to solve this question by peaceful means."
JET FIGHTER SALE
In this regard, officials indicated pleasure at what they interpreted to be a U.S. decision not to sell sophisticated jet-fighters to Taiwan. The thought was raised that such a sale coul inhibit (development of peaceful conditions which might lead to a settlement.1 "If such action (sales) is taken, it will obstruct reunification negotiations and settlement by peaceful means. If peaceful means are impossible, then armne(d force will have to be used."
On the possibility of Soviet intervention on Taiwan, the consensus was that normalization under the "Japanese Formula.," whereby nongovernmental relations between Taiwan an(d the United State's are maintained, would preclude Soviet entry into the equation even assuming the KMT reversed its historical anti-Communist policies. The thought was added that Chinese leaders doubtedd the UnitedI States would oppose the use of force by the PRC in the event of what was termed "a Soviet presence on T'aiwan."
It should be noted that no statement was made concerning third-party sales to the ROC. nor did the discussion cover any weapons other than the jets. On Oct. 24. it was r:umonned that President Carter had rejected an ROC request for advanced fighter plne.s. The ROC had previously indicated unwillingness to accept Israeli Kfir jets as a substitute for the F-5-G. and had been pressing for sales of F-4's. and other sophisticated jets to replace the present force in the 1980's. (Associated Press item in Baltimore Sun, Oct. 23, 1978.)





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Mr. Guyer concluded the conversation with the thought that; "We have been very impressed with the vitality of the Chinese people and their spirit of unity. It will be a tragedy if we do not find a way to bridge the gap between us and to cement our relations because I think we both have a great future."
TRANSCRIPTS OF CONVERSATIONS
The following three conversations between the delegation and officials of the People's Republic of China were "on the record." Tape recordings still and motion picture film, and extensive notes by CODEL staff members Palmer and Nelson were taken throughout the meetings. The following transcripts, while unofficial, represent as accurately as possible the complete conversations held by the delegation in Peking.

MEETING WITH HAO TEH-CHING, PRESIDENT OF THE CHINESE
PEOPLE'S INSTITUTE OF FOREIGN AFFAIRS, JULY 7, 4 P.M.,
AT THE PEOPLE'S INSTITUTE
Ambassador HAO. We met before in the United States. Do you remember the question you asked me at that time?
Representative WOLFF. If you remember, then you have a very good memory! Thank you for inviting us to China. There have been many changes since my last visit. My question to you during your visit to the United States was related to this. The purpose of our visit is to find ways and means not to negotiate (we are not negotiators), but to make progress in normalization based on our committee's shared responsibility with the Executive for matters dealing with normalization.
Ambassador HAO. We can exchange opinions. You are the representatives of the people and therefore, like me, a commoner. Chinese Communists are all interested in politics and discussion of policies. Let us discuss questions of mutual interest. I have a question for you. Is the arrogance of the "Polar Bear" in carrying out expansion becoming more restrained or more rampant? Why is he so aggressive, carrying out expansion from the Red Sea to the Horn of Africa, from North Africa to South Africa, from Europe to Asia-everywhere becoming more rampant? What do you think?
WORLD DOMINATION
Representative WOLFF. This has been a continued plan of the Russians for a long time-to seek world domination, China and the United States as well. I think however, it is a misconception spread by the press to say that the United States is not remaining strong min its determination to stop Soviet expansion. Sometimes there are press stories related to individual weapons systems that some Members of Congress have opposed, but our determination to continue to remain strong against our adversaries is evidenced by the fact that we have here Members of both the "liberal" and "conservative" elements of Congress. As a result of our difficulties with Vietnam, the United States takes the position of not wanting to interfere in the internal affairs of other nations, just like the position China has taken for a long time. We are well aware that the Soviets are now moving into new areas.





29

They have been in the Middle East for a long time. Now they are in Afghanistan and South Yemen openly. They are also in Angola, where they use the Cubans as surrogates.
Ambassador HAO. Also Ethiopia.
Representative WOLFF. And Vietnam.
Ambassador HAO. You are right.
Representative WOLFF. So they are moving all over the world and we now face a common adversary. I would like to ask the other members to comment.
Representative DE LA GARZA. I have my own opinion why the Russians are in so many places, but I wonder if the President would give his opinion to see if they match.
Ambassador HAo. About the Russians?
Representative DE LA GARZA. Yes.
Ambassador HAo. The "Polar Bear" has a wild ambition to expand outward and dominate the world. This was decided a long time ago and will not change. We have known this for a long time. He has a big appetite but lacks strength so he invariably displays one characteristic: He bullies the weak but fears the tough. If you wage struggle with him he is restrained but if you connive with him, his arrogance soars. Now he uses Western Europe as a focus and carries on unbridled expansion throughout the world. Recently, after succeeding in Ethiopia, the Soviet Union has continued its interference in the Arab Peninsula. Where next? Perhaps the Persian Gulf, the Red Sea area and southern Africa are the most dangerous. It has also stepped up expansion in Asia. This was manifested recently in Vietnam. Vietnam wants to be a small superpower.
First it wants to dominate Indochina, then all of Southeast Asia. A small superpower needs to find its supporter. The superpower and the small superpower share the same design, so they work together to seize Southeast Asia. In this way they can block the sealanes in the Western Pacific and encircle China from south to north.
Representative WOLFF. Including the Indian Ocean.
CHINESE IN VIETNAM
Ambassador HAo. Of course. Just now I mentioned the essence of the matter. Its manifestation is in the persecution and ostracism of the Chinese residents (of Vietnam). In this way, Vietnam wishes to curry favor with the superpower. So recently, some friends have said that Vietnam is the Cuba of Asia. Now there are so many Cubas. One is in Latin America, one in Asia. Now I am afraid there may be one in the Arab Peninsula-South Yemen. So I say the present international situation is very tense. Some people talk of detente. I don't see even its shadow. I say get rid of "Detente!"
Representative WOLFF. We no longer use the word.
Ambassador HAO. Just now you said some of the press underrate your strength. We say the United States has powerful economic and military strength. In the present world there are only two countries capable of fighting a world war. How can China fight a world war? Only you and Russia can. So we don't underrate your strength. Please do not have any misconception on that. But with your powerful strength you can only play your proper role when guided by a correct policy and correct principles. Otherwise, your strength cannot play its





30

proper role. I mean that in deciding on a policy toward the Polar Bear you should not be afraid. If you are not afraid you will not adopt policies which show fear of it. If you are afraid, unrealistic delusions may crop up in your mind. I mean when you adopt an approach in which you first of all try not to irritate the Polar Bear. Second, the Polar Bear is fond of chocolates. You supply it with advanced technology and trade to pacify it. Also you try to get concessions from it by making big concessions. In the final analysis, fear will make you adopt an appeasement policy which will lead to serious consequences, and your powerful strength will play no role. That is my opinion.
Representative WOLFF. We are not dealing on the basis of fear. Make no mistake about that. It may sometimes appear that way because we use methods which try to avoid war, but it is not based on fear.
CARTER SPEECH
Representative DE LA GARZA. Our ideas basically coincide. I agree with the chairman. I am sure you are aware of President Carter's recent speech in*Annapolis.
Representative FOUNTAIN. I'd like to echo Congressman Wolff's remarks. I think your comments reflect some of your concerns about what we have said and what our President has done. About 2 years ago I sat in the Shah of Iran's office for about 1% hours. HIe expressed concerns similar to yours. He said that United States is the last bastion of freedom left on the Earth, the only one strong enough to defend the free world by taking strong positions against the Polar Bear, not necessarily by fighting. I argee with him. I come from a section of the United States which produced our President. He is a softspoken southern gentleman who is attempting to handle both domestic and international problems. Some of his statements and some of the positions taken min SALT negotiations may have left the impression that we in the United States are not concerned about the Polar Bear. But the majority of Americans and a majority in the Congress understand Soviet expansionism. I assure you that we are determined to keep ourselves militarily strong enough to prevent the Polar Bear from taking over the world, even if we sometimes speak softly. Notwithstanding these appearances, there is a recognition that Russia and the United States have enough nuclear power to destroyy each other, and we have a desire to prevent the outbreak of war. When the President said to the Russians that it is either cooperation or confrontation, he spoke for the American people, and hlie meant what he said.
Ambassaor ILAo. With respect to the concern about U.S. attitudes lo :'rd thle Soviet Union, the Shah's concern is not accidental or unifile. '\Iany Western European countries share that concern. 'Yout know this better than I. One should judge whether or not a policy is Corret, not, by wor(s but by actions.

"POLAR BEAR"
Reresentative WOLFF. We know the "Polar Bear's" embrace can sometimes love youl to death.
Re)psentati RANGEL. I in the course of American efforts to top







Russian expansion, this leads to military confrontation, to what extent could we count on the help of our friiends in the P RC?
Ambassador HAO. I think that surely you wouldI not be isolate(I. The Polar Bear is not only the most, dangerous enemy of the Unitedi States but is also the most dangerous enemy of China, Western Europe, Japan, and the entire ThirdI World. This is not the time I'mthe United States to anticipate how to act in the time of war. We should take effective measures so the Polar Bear will he afraid to launch a world war and will not launch it. We must p~ostp~one suich a war. There are three methods:
First, make concrete preparations against war. One should not have unrealistic illusions.
Second, wherever the Polar Bear is engaged in strategic dleployments you must find every means to upset it.
Third, don't adopt an appeasement policy, in the face of your people or of the people of the world.
Then the people of your country and the whole world will be mentally prepared. Only by adopting these three methods can we insure that the Polar Bear won't treat you lightly and launch a world war. If it launches one, the people of the world will def eat it quickly. If we do not adopt these three methods the danger of war will approach. We Chinese adopt these three methods. Of course, you know wve are a developing country; that is, we are a poor country. But although we are poor, we are not afraid because we adopt these three methods.
U.S. BASES
Representative WOLFF. I served at the United Nations and you have been an ambassador. During the course of your U.N. session, China has many times joined the Third World countries, often led by Cuba, in opposing U.S. bases in many parts of the world. This goes against our joint interest. You said that we should use actions to op pose the Soviet Union. I want to give you an example. There are questions on, for example, Diego Garcia and our bases on Guam, as well as our troop deployments in Asia. If China supports our efforts in maintaining strong positions throughout the world, then these (your delegation's) U.N. actions are opposed to your position. As an example, there is the Guam "Resolution." Even though the people of Guam want the United States to remain, the resolution says that the United States should withdraw its troops, and this resolution was proposed by Cuba. In view of Soviet efforts to move into various areas of the world such as the Indian Ocean, the Pacific and Korea, has there been any change in Chinese policy, or is there a possibility of working together on these matters?
Ambassador HAO. I would cite your relations with Japan as an example. You have a security treaty and you have military bases. Since the Japanese are willing to let you stay and since you wish to stay, we do not wish to comment. Another example: You have 300.000 troops in Western Europe, and you have military bases there. You have organized NATO. Since you are willing and they are willing, we don't want to comment. Concerning your troops in South Korea, the people of North Korea do not agree to their presence there. In





32

South Korea, only President Park Chung Hee agrees, not the people. So we support North Korea. The United States should withdraw all its troops and equipment from Korea and let the people of Korea decide.
CAMBODIA
REPRESENTATIVE WOLFF. What is the present situation in
Cambodia?
AMBASSADOR HAO. We believe that the 6 million people of Cambodia will not submit to the 50 million Vietnamese.
Representative WOLFF. Do you think they can stand up to Vietnam without outside help?
Ambassador HAO. The Cambodians can stand up. They are not isolated because they have the support of the people of the world. It is an unjust cause for Vietnam to invade Cambodia while it is a just cause for Cambodia to fight against invasion, and thus they will gain the sympathy of the world. In the end they will succeed.
Representative WOLFF. We are attempting to help the refugees from Cambodia and Vietnam. We are trying to get Asian countries to take them and we are also accepting quite a few ourselves. Can we cooperate on this question?
Ambassador HAO. We have not considered this.
Representative WOLFF. Is there something we can consider?
Ambassador HAO. We don't want to now.
Representative WOLFF. When Congressman Burke and I were here 2 years ago and spoke to Chang Chun-Chiao, we talked about the possibility of the sale of military equipment to your government. He replied there was no interest on his government's side. What is your position now?
Ambassador HAO. Is it the policy of your government to sell this type of equipment to us?
Representative 'WOLFF. I am just asking if there might be the possibility that your country has an interest?
Ambassador HAO. Some years ago we wanted to buy computers with a capability of 10 million bits. The businessmen wanted to sell it, but your government would not approve the sale. You say that you want to sell military equipment to us, but aren't you afraid of irritating the "Polar Bear?"

MILITARY EQUIPMENT
Representative WOLFF. Perhaps there has been a misinterpretation. I asked whether China was interested now in military equipment. As to the question of computers, I believe that as our relations change there will be a greater possibility of making such sales.
Representative FOUNTAIN. VWe won't sell it to the Russians.
Ambassador IIAO. Now if you want to sell this type of computer, we won't buy it because we can make them. We don't have 100-millionhit computers but we don't need the first type. It seems that it benefited us that you didn't sell it because we can now produce it ourselves.
Representative WOLF. Then we, by inaction, provided cooperation, but we have advanced beyond that.





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Ambassador HAo. Thank you.
Representative DE LA GARZA. I would like to say something. We spoke of the Polar Bear, of how they come into countries for aggressive purposes, sometimes through the Cubans. But 10-12 years ago, I visited Africa and I saw China helping Africa, not promoting ag(,c-ression. An example was in Tanzania where you were helping build a railroad. I would like to remind you of this and commend you because of what I saw.
Ambassador HAo. Thank you for your commendation.
Representative RANGEL. When I was a young man I had the opportunity to find myself in the northern part of North Korea. Thanks for making it possible for me to make a speedy return to the United States. [Laughter.]
Ambassador HAG. Did you reach the Yalu River?
Representative RANGEL. Yes;- but only for a very short time, [Laughter.]
Representative WOLFF. You say the people of South Korea don't want us. That is not true. That is not what they tell us. The North Korean people may not want us, but North Korea was brought into the war by the Russians.
Ambassador HAO. You say the South Koreans want you to be there. Your information comes from Park Chung Hee. Our information comes from the people. Our sources are different so our views are cliff erent.
Representative WOLFF. That doesn't cover Guam. And what about Vietnam? We were there; now the Russians use Vietnam to threaten
the peace of Southeast Asia.
Ambassador HAG. It is true that it threatens the peace of Southeast Asia. There are three elements there: Southeast Asia, the United States, and China. Is it frightening? It ,is not.
Representative WOLFF. It is bad but not frightening.
Ambassador HAG. It is not so serious but we must deal with it.
Representative WOLFF. We have talked about our differences. Let's talk about how we can work together. How can we get together on such matters as trade, economics, and military affairs?
Ambassador HAG. The Shanghai communique opened a new chapter in the relationship between our two countries. It has expanded contacts between our peoples. For example, you are now in China. Could you have come 6 years ago? You wouldn't have gotten visas. Now you want to come, we want you, and you are here. There are also trade relations between our two countries. Also cultural relations, scientific and technological contacts. The problem is that after 6 years, our relations are still not normalized, If normalization had been achieved, relations would develop even faster. Since there is no normalization, the development of our relations is necessarily affected. Didn't you ask last year whether we could just develop trade and put aside normalization? Do you remember?
Representative WOLFF. Why did I ask the question?
Ambassador HAG. I don't know.
Representative WOLFF. Because I understand that you were the hardest liner on Taiwan. [Laughter.]





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ACTIONS IN VIETNAM
Representative WINN. You have suggested that the United States should try to upset the Polar Bear around the world. Are you yourselves trying to upset the Polar Bear by your actions in Vietnam in the last few (lays?
Ambassador HAO. Of course. Wherever it takes action we exert our efforts to upset it. Since you are in Peking, you can see from broadcasts and newspapers that the struggle is intense. Who do we fight? On the surface we are struggling against the small hegemonist power, Vietnam, but in reality we are struggling against the big hegemonist power.
Representative WINN. Would you like the United States to help you upset the Polar Bear around the world even without normalization?
Ambassador HAO. We don't need that. Each of us can act according to our own way. We do ours and you do yours. There is a Chinese saying that different paths lead to the same goal. By taking different roads our actions in essence are coordinated. Take the second Zaire invasion as an example. In the first invasion the United States did nothing. In the second one you did something; we did more and the invasion was defeated.
Representative WOLFF. The relations between our two countries should not be based solely on the existence of a common adversary, but also on a common mutual interest in world peace.
Ambassador HAO. We share your aspiration. If relations are normalize(d there will be more opportunities for this.
Representative WOLFF. Thank you for giving us the opportunity to visit China and to meet you. Do the other members have any more questions?
SOVME BUHD!YP
Representative BURKE. Last time I was here your leaders said that there was a similarity between the Soviet buildup and what Hitler did. Like Hitler, the Soviets would eventually have to commit troops to Eastern Europe and then to attack all of Europe. One of your ambassadors overseas also recently said the same thing. Do you have similar views? Will the use of troops in Europe occur, and if so, when?
Ambassador IHAO. At present the Soviet strategic focus is in Western Europe, because Western Europe is an area with powerful military strength; it is also an area with a high level of science and technology and( occupies an important strategic position in the world. So in order to dominate the whole world they must first seize Western Europe. The Soviet Union has concentrated its troops in Eastern Europe and in the European part of Russia and has trained them in Western Europe. Although three-quarters of its troops are in Europe, the time is not ripe for world war. It uses its troops for bullying and sows dissension in order to force U.S. troops out of Europe. In this way it can win without a fight. At the same time it also carries out strategic deployments in North Africa, the Middle East, and Africa in orler to encircle Western Europe from the flanks. Imagine when it seizes strategic materials from Africa and the Middle East, especially oil, andl cuts off sealianes, it will then be easy to seize Western Europe. That is its strut egic d(lesign. Some people say it is aimed at the East.





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We say no. It pretends to be about to fight in the East. it feints to the East but attacks in the West. It wants to divert attention. It is not possible to succeed in the East. Also the East does not carry the strategic significance of the West. ViIl it launch a war against Western rowin" but wris not likely to
Europe soon? The factors for war are growing break out in the next 3 to 5 years. It is difficult to say after that. It will depend on the efforts of all of us. It is possible to postpone it for 20-25 years. We Chinese are peaceloving. We don't -, to fight wars. But it is not up to us. We are not Moscow's Chief of General Staff. We must beware of this danger.
Representative FOUNTAIN. In view of this situation what do you think the United States ought to do?
Ambassador HAO. You ought to apply the three methods which I mentioned earlier: To make preparations against war; to attemljt to upset Soviet strategic deployments; and to bury your appeasement policy.
UNSETTLED QUESTIONS
REPRESENTATIVE WOLFF. I have one final point: There are a number of unsettled questions on the China boundary. Some islands are in dispute; the question of Hong Kong is not pursued very actively because the situation is satisfactory to your country. We haven't spoken of Taiwan today. Isn't there a similarity here? Is this not another boundary question?
AMBASSADOR HAO. You switched the subject. Do you have any ideas on Taiwan?
REPRESENTATIVE WOLFF. I would like to find a way to talk about boundary questions. I think that perhaps Taiwan can be placed in a boundary context, rather than the way it has been treated before.
AMBASSADOR HAO. I don't want to discuss it as a boundary question. Taiwan is Chinese territory. Even though we explore this question today in a friendly atmosphere I'm afraid we might get emotionally excited, but since we are old friends I would like to say that you owe us a debt. I don't mean those of a century ago. We don't want to settle those. We are looking toward the future. But now we are in the 1970's and you are still interfering in the internal affairs of China. You lon't respect our sovereignty. Don't you owe us a debt? We don't want to settle old debts, but on Taiwan it is more beneficial to the United States to settle it sooner, rather than later; faster, rather than slower. We think that the five principles of coexistence should guide international relations. This was recognized by both sides in the Shanghai communique. By this principle, who owes whom debts? Of course you owe us. Take the first principle. It says that one should respect sovereignty and territorial integrity. You enjoy territorial integrity; we do not. The second principle is mutual nonaggression. Does China have troops in the United States? No, but you have them in our country. The third principle is noninterference in the internal affairs of others. Taiwan is ours and you are interfering in our internal affairs. Some people even try to create "Two Chinas." So we are not going to settle old accounts but you are incurring new debts. The more you incur them the worse it is. I said the same thing at the breakfast meeting in the House of Representatives and at lunch in the Senate.
REPRESENTATIVE WOLFF. I recall.





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AMBASSADOR HAO. Our two peoples are friendly to one another. The Chinese people are friendly to the United States, and in my own experience the American people are friendly to China. In my opinion the American people's view is that normalization can be realized very quickly. In the international world, the earlier the normalization of our relations, the better. This will be more beneficial to you than to us. I want to stop here. I don't want to settle accounts between us since 1848.
VISITS AND DISCUSSIONS
REPRESENTATIVE FOUNTAIN. I have one observation. I am not familiar with the computer problem you mentioned. Maybe we made a mistake. It is like when we turned down Nasser on the Aswan Dam. Now Egypt knows the true nature of the Soviet Union and so do other countries in that area. I think that on normalization, we can further this by promoting other types of relations. The process can be continued through more visits and discussions such as this. I know the Chinese are a proud people and do not want to ask, but if there is something that China needs, you should ask us. Maybe not that computer, but something else. I agree-I think the American people are friendly to China.
Representative GUYER. I would like to invite you and your colleagues to visit the United States.
Ambassador IIAO. Thank you. I will go there when there is an opportunity.
Representative GUYER. Perhaps we should convey that to our Government and work out an invitation.
Ambassador HAO. Not the Government. I am just a common citizen.
Representative GUYER. Our subcommittee might work out an invit ation.
REPRESENTATIVE WOLFF. Thank you, Mr. Ambassador.
MEETINGG WITH VANG JUN-SHENG, VICE MINISTER FOR FOREIGN
TRADE, MINISTRY OF FOREIGN TRADE, JULY 7, 1978, 9 A.M.
After exchanging opening pleasantries, Congressman Wolff began the conversation by noting that both countries had a common objecfive to work together to promote closer cooperation between our two Countries.
Minister WAxNG. I am delighted to meet all of you and to have this ol)portunity to discuss matters of mutual interest. I believe this is your second visit to China?
Representative WOLIFF. Yes, for me and for Congressman Burke.
Minister WANG. Since it is your second visit you now have a better understanding of conditions in China.
Representative WOLFF. Yes, you can say I am an old friend of
Minister WANG. Friends who visit us several times we consider old friends, but even those who come here for the first time are friei(is because they have iiiade a contribution to mutual Sn d ers t a in ig





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TRADE QUESTIONS
Representative WOLFF. I believe it is important to strengthen our relationships so that we can move toward normalization, especially in the trade areas. That is why we requested a meeting with .-oii today, to discuss problems which exist between our two countries and to see how we can help to solve them. In some areas there are still difficulties that stand in the way of increased trale. One of these iS the question of frozen assets. I would like to ask what progress can be made in solving this question? I believe that until this question is cleared up it will be difficult for both countries to conclude such agreements as aviation agreements, banking arrangements, and other matters.
Minister WANG. The question of frozen assets is not an important problem. Both our governments have already exchanged views on this question in the past few years. We do not think it will be difficultt to solve. In previous years, trade between our two countries has reached a fairly high level, then in some years it has dro)pe(l. This year it will be up again. Lack of normalization affects the level of trade and the export controls imposed by your country also affect the development of trade. Sometimes our groups sign contracts but your government authorities do not approve the export licenses.
Representative RANGEL. What areas in particular do you have in mind?
Minister WANG. I think you are very clear about this. One example is in the field of electronics.
Representative WOLFF. Electronics and computers.
Minister WANG. Also when we want to import a company )lant, sometimes there is one component in this plant whose export is not allowed. This then affects the whole sale.
Representative RANGEL. Specifically what type of components have you found this to be a problem with?
TRADE CONTRACTS
Minister WANG. It occurs not only in electronics but also in other areas. This is a manmade obstacle to trade.
Representative RANGEL. In America, business and government operate on two different levels. We Members of Congress would like to find ways of removing these obstacles. It would be helpful if you could tell us what types of difficulties you have so that we could try to make it easier to develop trade between our two countries.
Minister WANG. We hope that the U.S. Government will provide facilities for trade with China in the spirit of the Shanghai communique. Whenever we sign contracts to import goods from America, American authorities should approve these exports. You should export what commodities you can.
Representative WOLFF. One obstacle in the past has been export licenses for highly sophisticated electronic equipment and components. With changing circumstances I think there is a greater opportunity to lift some of these restrictions so that we can be helpful to each other.
Minister WANG. The U.S. Government has set obstacles not only on goods produced in the United States but also on some from other countries.





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Representative WOLFF. You mean licensing?
Minister WAG. The American Government creates obstacles under the provisions of the so-called CoCom. CoCom is difficult for us to understand.
Representative WOLFF. This was originally an effort to see that sophisticated technology was restricted to our closest allies. We are now moving toward a policy of friendlier trade which will lead to liftin, controls on a wide variety of items. This question should be discussed at the highest levels between officials who understand these problems. Discussion should be not only with businessmen but also high-level trade negotiators. Perhaps we ought to recommend that Robert Strauss come here, since there is now a high-level American science mission in Peking. There should also be a trade mission to discuss these difficulties.
REMOVAL OF OBSTACLES
Minister ANG. In order to solve this problem one should take the Shanghai communique as a basis. As long as both sides follow the provisions of the Shanghai communique, trade can develop. We would like to see the removal of those obstacles which stand in the way of trale. Efforts of the business community have already helped to remove some of these.
Representative WOLFF. You mean the Deadalus case?
Minister WANG. Yes; but the export was delayed, which caused us difficulties. Sometimes a business signs a contract but we are not sure whether your Government will approve. Some U.S. trade organizations invite us to visit the United States for a technical exchange, but the U.S. Government then does not approve the export of that technolovgy to China.
Representative WOLFF. We should explain to you that these provisions are not directed against China. The American policy is to restrict certain types of equipment and prohibit export of these types to all countries.
Representative BURKE. For security reasons.
STATE VISITS
Representative Wixx. Since we are talking about trade missions I would like to say that I hope that in the future, Chinese trade missions to the United States could include a visit to Kansas, my home State, because it is the center of food production. They should also go to Oklahoma and Texas, which are neighboring. States, in order to look into oil production. I think both of these missions could accomplish quite a bit, and I would like to extend an invitation for a mission to visit Kansas.
Repiresentative WonvF. Concerning oil exploration, I wonder if the Government of the PRC is interested in joint ventures with American companies using high technology and American expertise as a method of getting around the export license problem?
Minister WANG. I have often heard that the United States practices export cont rols because of security reasons but our import of American technology will not affect your security. If you think it will, you overestinate our abilit v.





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Representative RANGEL. Tell them these are not directed against China.
Representative WOLFF. I'd like to reiterate that these controls are not meant directly against China. They are part of a worh Iwide policy of our Government. We are now changing our relationships with the PRC as a result of our policy on moving toward normalization.
OBSTACLES TO TRADE
Minister WANG. We hope you will continue to make efforts and that the U.S. Government will act to remove these obstacles to trade. In our policy of striving to achieve the four modernizations, we rel3" mainly on our own efforts but for the most advanced technology, this comes mainly from imports. It is certain that a l)owerlul China will be of benefit to the United States in a threat. This is in your strategic interest. As for oil exploration, a number of U.S. companies have come to China to exchange views on this anl others will follow. This proves that we are interested in exchanging views on matters of mutual interest.
Representative FOUNTAIN. Some export controls are prompted by complaints from other countries who are afraid of U.S. exports flooding their markets. We also occasionally have this fear; -for instance, in the field of textile imports. This is where someone like Bob Strauss can hel) through negotiations by equalizing these problems. I would like to refer to a document I just received from the National Council on United States-China trade which presents a comprehensive picture of China's 10-year plan and of the prospects of the China market. It talks about the Chinese economy and your economic plans and is encouraging to those of us who wish to trade with China. Its conclusion is as follows, and I am paraphrasing:
A HUGE MARKET
China represents a huge market. It is following a pragmatic policy toward foreign trade questions. There is a great opportunity but U.S. companies are not trying hard enough. Most of our exports to the PRC are still agricultural. U.S. firms must be more aggressive in seeking to sell to China. Some, for instance, hear that they have competition from a Japanese company and simply give up. Normalization will help in the development of our trade with China but there are many things short of normalization which can be done and American firms will have to work harder in order to increase our trade.
Would you care to comment on this document?
Minister WANG. The Council has given you a true picture of China. Trade will develop in order to help develop our national economy. Since our relations with the United States are not yet normalized there are still some obstacles but this does not mean that we cannot develop trade. Recently we signed a long-term trade agi'eement with Japan. We also have a trade agreement with the Common Market. Both of these will be conducive to the development of our foreign trade. From our side we can import a number of commodities from the United States, mainly industrial. This does not, of course, exclude the possibility of some agricultural imports.
Representative WOLFF. Isn't this a change in your position?





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Minister WANG. No, our policy is unchanged. We have consistently stood for the development of trade on the basis of equality and mutual benefit. As a result of the signing of the Shanghai communique in 1972 we have developed trade with the United States in the spirit of that communique. Of course, in recent years we have been preoccupied with domestic developments and particularly during the Cultural Revolution we stressed the problems we have at home. The Cultural Revolution won some achievements but it was eventually sabotaged by the Gang of Four. They also sabotaged our relations with other countries and thus affected some implementation of our consistent policy. Since the smashing of the Gang of Four we are now able to apply more smoothly our consistent policy but that policy has not changed. We now just act on it better. We have now entered into a new epoch of construction and we have a greater need to develop international trade and to expand trade. We need to import commodities in large quantities and at the same time we need to increase our exports.
CHINA EXPORTS
Representative WOLFF. What types of exports can you send to the United States?
Minister WANG. There are quite a number of things. For instance, items of daily use, consumer goods, light industrial products and some minerals and metals. Also, if we develop our oil production we could possibly supply some oil to you.
Representative WOLFF. That's very important.
Representative DE LA GARZA. You seem very concerned about advanced technology but as far as I know, the only controls we have are on three things: military items, computers with dual civilianmilitary use, and nuclear equipment. Other technology such as medical technolo( gy, agricultural machinery, and so forth, are not controlled; only those three items.
Minister IVANG. It is very difficult to distinguish between military and civilian use. For example, we can import grain and if the people eat it it is civilian. If the army eats it then it is military.
Representative DE LA GARZA. That is not the problem. There is no control over any but those three items.
Representative WOLFF. But there is sometimes some question over the ultimate use of equipment like trucks and aircraft.
Representative GUYER. I think there are certain ideological goals that our two countries could share, not only trade. There are positions we could agi ee upon. As for trade, I wonder if we could have a list of some areas where you could invite companies to come to China to help out like you have with Pullman. My congressional district has a great deal of' agribusiness. If we could have an invitation list to take home to our people this could speed up the process of the development of trade.
Minister WANG. We share your desire to develop trade with the United States. We hope we can remove the obstacles in the way of trade. Ve also hope that visits between our two countries will be more frequent tlhii they have been before. In the future we will speed this





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Representative WOLFF. Do you feel it would be possible to have an exchange of landing rights for airlines in each country so as to hell) increase visits?
Minister WANG. This will be difficult because of the lack of normalization. We do not preclude the possibility of individual planes comrin to our country or going to yours. For instance, you came here on aI American plane but this could not be a regularly scheduled service.
(OOPERATION
Representative WOLFF. I want to thank you for receiving us. I think our visit here served a useful purpose. Our wish is to increase the possibilities of cooperation between our countries in all fields. Most of the members of this delegation are on the International Relations Committee and we include chairmen of individual subcommittees. Mr. Rangel is also on the Ways and Means Committee which deals with the question of "most favored nation." We proposed to do what we can to advance normalization. The question of political normalization must go through the committee as well as through the Executive. We share authority with the Executive and our objective is to seek means to advance the process of normalization. We think this will be in the best interest of both countries.
Minister WANG. I am very happy to have been able to exchange views with our American friends. This will contribute to advancing mutual understanding. I think that the development of relations between our two countries is in the interest of our two peoples. It is better for you to come to China to see things with your own eyes. Some views may not be acceptable to the other side but we do have some points in common. For instance, both sides desire to develop trade and both sides wish to remove obstacles to trade. We are willing to develop trade and if there are obstacles they must be removed. If they are not then we will go ahead and develop our trade with other countries because we will be forced to do so. We hope that you will use your influence to work toward improving our relations.
INCREASED VISITS
Representative FOUNTAIN. We also hope that in the future representatives of China will come to the United States to talk to people engaged in trade and get a clearer picture of our side. I note that your leaders have recently been traveling more and I hope that some of them come to the United States. Your leaders could gain better understanding of those problems and help to resolve these obstacles. In fact, the United States does not have very many restrictions on foreign trade.
Minister WANG. Quite a few of us have gone to the United States already. Most have been specialists but they included some senior officials. We hope to increase this type of visit. Representative WOLFF. I hope that as a result of this trip and knowing more about some of these problems and your desires that we in Congress can eliminate some of the obstacles to-trade between our two countries.


35-200-78---4





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MEETING WITH DR. CHOU PEI-YUAN, VICE PRESIDENT, ACADEMY
OF SCIENCES; PRESIDENT, PEKING UNIVERSITY (AT ACADEMY OF
SCIENCES) JULY 8, 1978-9:30 A.M.
[Following introductions.]
Representative WOLFF. Congressman Winn from Kansas is not only a member of the International Relations Committee, but is one of the ranking members of the Committee on Science and Technology of the Congress.
Before, when I first came to Congress, I was a member of the Science and Technology Committee. And Mr. Winn also serves on the Space Science and Application Subcommittee.
Dr. CHOU. We welcome Congressmen who are doing political work as well as Congressmen doing scientific work. To use our way of saying things, the science and technology in our country serve the needs of proletariat politics. By politics we mean we must build the socialism, we must criticize the Gang of Four and we must pursue the philosophy of Marxism, Leninism, and Mao Tse-tung's thought to guide our work, so science and technology cannot be separated from politics and philosophy. So if you have any questions in this respect, we will be glad to answer.
SCIENTIFIC MEETINGS
Representative WINN. I would like to ask the professor what part, if any, he is playing in the meetings with our scientific advisers?
Dr. CHOU. Dr. Frank Press is an old friend of mine. The first time he visited China in 1973, he led a seismological delegation. I was working in Peking University. I received him there. In 1975, a delegation of the Scientific and Technical Association visited the United States. It was received by Prof. Frank Press and also the Academic Exchange Committee. You see Frank Press was the head of the Committee on Scholarly Communications with the People's Republic of China. There were 14 others-we were staying with different scientists of the United States. I had the privilege of staying with Prof. Frank Press in Boston.
Representative '\INN. Have you seen Frank Press and his group since they've been here?
Dr. CHOU. Yes; I had the honor of greeting him at the airport when he arrived in Peking. I also attended the banquet given by Comrade Fizng Li, Chairman of the Scientific and Technical Commission of China.
Representative WINN. Can you give us your opinion of how the scientific talks are going between the PRC and the United States at the present time?
Dr. CHOU. I didn't join these discussions. I am doing scientific work at the moment and the delegation led by Professor Press is invited by the Scientific and Technical Commission. On the Chinese side, the discussion is presided by the Scientific and Technical Commission. Of course there are some lea(lers of the different scientific departments who also take part. From the academy, some other comrades are taking pmart in the discussion, so I am not, joining them.
Representative Wi.NN. ("an the Professor tell us, if he would, what scientific work he's involved in at the present time?
Dr. CHOu. Recently, theoretical physics; in the past I was involved





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in general relativity. For many -years I've been involved in the stily of fluid mechanics. I camtfe to Peking University only veiry recently. I came to the Science Academy very recently.
Representative WiNN. Lester Wolff and I formerly served as members of the Science and Astronautics Committee, the Space Committee. But 4 ears ago we changed the name to the Science and Technology Committee. And at the present time, half of our jurisdiction deals with energ)T, that's where the technology comes in. Instead of the astronautics, we still have the space program.

SCIENTIFIC DEVELOPMENT
Dr. CHOU. I think I can give you a briel introduction about the development of China's science and technology of the future, in the near future. Just now, you talk about the space science, an( we are also attaching great attention to this subject. This year, the 5th National People's Congress was held, and at that Cong-ress the general task for the new perjo(l was decilel. That is, we should realize the four mo(lernizat ions by the end of the century. The four modernizat ions are: in(lnstiy, agriculture, science an(l technology, and national defense. After the completion of the 5th National People's Congress, the National Science Conference was held, about 6,000 people took part in the conference. At the National Science Conference, we (liscussed the important thing, that is the plan for the years 1978-1985, for the development of science and technology in 8 years. We have set some goals in a plan. By 1985, we need to build a contingent of 800,000 scientific and technological research workers. According to our know]edge (this knowledge may not be correct) there are 1.2 million scientific and technological research workers in the United States. Since you're working on the Science and Technology Committee, you may tell us whether this is Correct or not.
Representative WOLFF. It depends entirely upon how you interpret science and technology; whether you're talking about pure scientists or applied scientists.
Dr. CHOU. If you count these together?
Representative WOLFF. It is very difficult to say because so much of the research in applied science is being done by individual firms rather than by the Government itself. Therefore it is hard for us to make any assessment of the numbers, but I would say that your figures are perhaps very conservative in the amount. There are more today in applied technology for example. We have a great number of people working in that area which would expand that figure many times.
NUMBER OF SCIENTISTS
Dr. CHO. We have a pretty accurate figure of the numbers of Ph. D.'s who are trained in science, engineering, and medicine. It is a fairly good estimate. But still, there are many people working in industry who do not have a Ph. D. According to our information, the Soviet Union has 900,000 research workers. Even if we have trained 820,000 research workers by 1985, we are still lagging far behind, compared with you, because you have only a population of 200 million while we have a population of 800 million.
Representative WINN. What about the facilities to train that many people?





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Dr. CHOU. Now we have better industrial bases than we had in the early days after our liberation. And our Government is going to make big investments with regards to facilities. We are going to supply the main universities with more equipment.
Representative WOLFF. When I visited here in 1975, I went to Peking University. At the time there was a question as to whether or not the political activity overshadowed the scientific. We have always had a great question in our own country of academic freedom; how does the situation stand today? I know that in your opening comment you did make the relationship between politics and science. Yet to operate most efficiently in the scientific field you have to have the freedom to develop your techniques and the application of those techniques.
Dr. CHOU. In which month did you go to the Peking University in 1976?
Representative WOLFF. April.
CURRENT PROGRAMS
Dr. CHOU. It was a dark period for the Peking University at that time. It was under the rule of the Gang of Four. Because at that time the Gang of Four was on the loose. It was attacking the party relentlessly. The Gang of Four wanted to seize the stage and party in power. It used Peking University for the bridgehead. By a bridgehead, I mean they used the Peking University and also the Ching Y University. They set up a joint criticism group from both universities and used this group as a basis to propagate the public opinion they had prepared: Anti-party, anti-Mao Tse-tung, anti-Chairman Mao's revolutionary line public opinion. The criticism group of Ching Y and Peking University confused the minds of the people, which was very serious. With regard to the academic freedom mentioned by Mr. Wolff, I would like to comment on it later. In our plan for the development of science and technology we are also going to fulfill our task in the 27 spheres and we are going to undertake more than 100 programs. The 27 spheres include the basic science and also applied science. Among the over 100 programs, 8 programs are vital. They have a vital bearing on the development of our national economy. The 8 programs are: (1) liThe research of agriculture; (2) material science; (3) energy; (4) computer science and technology; (5) space science and technology;
(6) laser; (7) high energy of physics; and (8) genetic engineering.
The science and technology of space is listed as one of the major programs in the near future. We can also divide these eight programs into different groups. I think agriculture, materials, and energies have vital values on the national economy. Another three programs are advanced technology. They are the electrocomputers, laser and space science iand technology. The remaining two, that is the high energy physics an(d genetic engineering, are basic sciences. You can see that we have a comprehensive plan for the development of science and teclhnology. After the plan is drawn, the scientific and technical org.rniz:it ions, also the universities and schools of higher learning, the enterprises iand also the local scientific and technical organizations unlertaike the task and they are trying every method to fulfill our plan.





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RESEARCH INSTITUTES
In our country we have research institutes which belong to the Science Academy. Then we have research institutes and research groups which belong to the university and institutes of higher (1 riiin We have research institutes attached to the various ministries of .production, like agriculture, machinery and so forth. Then we have research institutes which belong to the provincial governments, like Peking, the city of Peking, the city of Shanghai, and also the provinces. You see all these are a network, so far as scientific research is concerned, it's under the leadership of the State Commission for Scientific Research.
Representative WINN. It still is a very ambitious program.
Dr. CHOU. It is. This isn't the first time we drew up a plan. Actually, in 1956, we drew a 12-year plan for the years 1956-67, under the direct leadership of the late Chairman Mao. We fulfilled this plan 5 years ahead of schedule, in 1962. That was the first plan for the development of science and technology in China's history, for a country which has 600 million people.
With regard to academic freedom we are acting according to the principles made up by Chairman Mao. That is "let 100 flowers bloom and 100 schools of thought contend." After the plan is drawn, we don't'mean we will carry it to the letter. When a situation changes and when there is a need to make alterations these will be allowed. Because we can't know everything at the moment. We-must enhance understanding through practice.

ENERGY POTENTIAL
Representative WINN. Would the professor care to touch a little bit on the .direction China is going on the energy problem?
Dr. CHOU. Of course, I'm engaged in the basic science research. I'm not very familiar with this subject, but I will give you my opinions.
Representative WINN. According to the information we have received, China has reached petroleum, coal, water resources, and water power.
Dr. CHOU. Our American friends know a lot about our petroleum resources because much has been quoted about the reserves in China and we're not very clear about it. We have already set high goals for ourselves. We are going to build 10 major oilfields.
I think we have rich petroleum fields and our friends know this. I think we have natural oil resources and the Japanese industrialists are very much interested in it because they import oil from the Arab Peninsula.
Representative WOLFF. So do we.
Dr. CHOU. So there is a wide prospect for trade in this respect. Of course we will make economical use of the oil resources, we will not waste the resources.
Representative WOLFF. One of the points I think is quite important in all of the exploitation of fossil fuel is that these are exhaustible supplies; they are not inexhaustible, and they can be used up. I noticed you did not mention any work in solar energy or nuclear and the like. Nuclear energy is exhaustible unless you use a breeder reactor which produces its own fuel. The importance, it seems to me, is that you





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have the attributes of a desert (which is something nobody considers an attribute) and you get a lot of sun. Combining work with us in space and the utilization of your desert to farm energy seems to me to be a field for the future that China could establish great leadership in.
Dr. CHOU. Of course with these fossil oils and fuels, for instance the petro and the coal, we should make economic use of these resources.* If you waste them, they would be exhausted very quickly. According to my knowledge, I think in China we've not yet developed the private ownership of automobiles. We are going to develop public transportation facilities.
Just now you mentioned solar energy, there is also thermoenergy.
Our country is also researching this subject. For instance, the Research Institute of Physics is undertaking this subject-plasma physics and thermonuclear control and fusion energy.
WATER POWER RESOURCES
We attach great importance to these subjects and we are going to explore the water power resources. We have been talking about building a reservoir in the gorge of the Yangtze River. We have been making studies for over 20 years. I myself attended water conservation conferences twice, in 1958 and 1959. If a dike is built on the gorge of the Yangtze, 30-40 million kilowatts of electricity can be produced. After the construction is completed there, a manmade "Mediterranean Sea" will be created in China. And the climate in that area will be changed. Also navigation and fishing are involved in this respect. So many aspects are involved, we have been undertaking this study for many years.
Representative WOLFF. One of my first exposures, some 14 years ago, in the Science and Technology Committee was experimental work in what we called "moving the weather"-of moving the climatology from one area to another.
You did mention genetic engineering. I'm wondering why the em)hasis on genetic engineering? What is the ultimate purpose?
GENETIC ENGINEERING
Dr. CHOU. Genetic engineering will play a very favorable role in the development of our agricultural production. It will improve the strains. About the energy problem, I would like to add one more word. Although China has rich energy resources, we still need to develop energy. We are still in great need of energy. In the countryside, we are still lacking many fuels. In the country we are now using nat ural gas for fuel which can produce electricity.
ReIesentative WOLFF. We have of recent years been doing the same as you know. In fact, today we have almost a greater need for natural gas than we do have for oil.
Dr. CnOU. We have very miuch enjoyed our discussion, but since time' is limited, may we stop here?
Representative WOLFF. 01ne final point. Do you foresee mutual c:ooi)eration in the scientific area where we can profit from your activity in research a1( eveoI)ment. fl( and yOtt (.11n profit from ois?






47

Dr. CHOU. Yes; the Chinese people very much support scientific exchanges. This is the very first item listed in the Shanghai communique, and we have made some progress in this in the past 2 years.
We have some limits at the moment because there is no normalization of relations between our two countries. But if relations are normalized between our countries, then we can make bigger strides. I a0wree with you that exchanges are beneficial to both sides. The machinations of the Gang of Four unfortunately widened the gap between our two countries, so we welcome you now.
Representative WOLFF. Thank you, Dr. Chou.














THE ITINERARY
A complete listing of the delegation's itinerary is presented as the first item in the appendix. The purpose of this section AN-III be to discuss briefly some of the highlights of the itinerary, and to note some of the themes currently motivating China which the itinerary seemed to illustrate.
Each of the cities visited-Shanghai, Peking, Sian, and Cantonprovided the Delegation with a varied "mix" of Chinese industry, culture, and social activity in what might be termed "post-Gang of Four" China. If there was a predominant theme in virtually every stop we made, it was the difference between life under the "Gang of Four," and during the Cultural Revolution, and what things were like-and likely to be-under Premier Hua and Vice Premier Teng Hsiao-ping. SHANGHAI

The first 3 days were spent in Shanghai, one of China's most Westernized cities, built originally as a trading port for the Europeans, and retaining a physical veneer of modernity, vintage 1935. As befits a major city, the people of Shanghai moved with the bustle of their compatriots in any society, on any continent.
Four events in Shanghai stand out: The visit to the Shanghai general Petrochemical Complex, a tour of the Shanghai Dance Institute, the "July 1" commune, and a concert by the Shanghai Philharmonic Orchestra.
While the petrochemical complex might at first glance seem the key to understanding China's modernization pro( gram, the cultural aspects of the dance institute and the concert also played an important part in the tapestry woven by our 10 days in the People's Republic. All three had this in common-their activities have been greatly affected by the shift in power.
Petrochemical Complex Director Kung Chao, juan made clear China's interest in Western involvement in development, and in Japan's role in developing the complex to its present state. Equally, however, the director was proud of the work by ordinary Chinese *in constructing the basic site. Prior to the fall of the "Gang of Four," only the theme of self-reliance would have been discussed-rather than the contributions of Japan, and the need for future foreign involvement. The delegation received the standard tour; briefing by the director and his colleagues, a walkthrough of a section of the plant and its production line, a visit to the kindergarten for worker's childr n, typical worker's housing where we talked with a "model family," and a stop at the complex hospital, for a talk with doctors and staffand, of course, an acupuncture demonstration.
(49)





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The importance of the tour was that the delegation could see first hand what China considers to be a prototype for its petrochemical development, and for industrial complexes in the years ahead. An immediate impression of the delegation was that standards of environmental protection for workers needed to be greatly increased. Raw, unfiltered acrylic fibers floated free throughout the plant, and a steady ingestion of such particles will surely lead to severe health complications in a few years. This was discussed frankly with the medical staff of the hospital, who said they were aware of the potential, and were testing workers on a regular basis.
But the petrochemical complex, and for the same reasons, the "July 1" Commune, were basically what the delegation expected to see-and was expected to see by its hosts. In this respect, the itinerary differed only in location from that of most other congressional visits before, during, or after the 'Gang of Four."

CULTURE
The visits to the Dance Institute, to the Yu Gardens, and the Philharmonic were of a different order, however. At these three stops, arranged at the delegation's request, our hosts made clear to us that what we were seeing would have been impossible just 18 months earlier. The gardens had been closed to all but senior padres. The Philharmonic could never had played the Western pieces (New World Symphony, among others) nor many of the Chinese works we heard. And the Dance Institute drama students performed a scene from the )play, "The Dying Tree Comes to Life," banned by the leader of the "Gang of Four" Mao's widow, Chiang Ching.
These cultural events, and the history of the recent years conveyed by individuals at each visit, brought home to us a sense of the pervasive and paralyzing influence of rigid adherence to strict ideology developed during the Cultural Revolution, taken to its logical extreme by the "Gang," and which is now being rapidly undone by Premier IIua and Vice Premier Teng.
Our hosts seemed to be showing us that if the petrochemical complex, an(d the "July 1" Commune, are to play their role in modernizing and feeding China, then the intellectual flexibility and creativeness symibolized by the young dancers, writers, and actors must likewise he harnessed. It was particularly on such occasions as the visit to the institute that the theme of "Let 100 flowers bloom, let 100 schools of thought contend" was cited as the new rallying cry for China's renewed development plans.
PEKING
In Peking, the importance of the delegation's talks with Vice Prtemieir Ieng and his associates obviously formed the major highlights of the mission to the People's Rep)ublic of China. But in Peking as well, the cult ural messages 1 members had been almost subconsciously absorbing coitilnued.
Al1in, the delegationn was taken to an urea closed und(ler the "Gang (1 Four" and reserved( only for senior cadres-Pei Iai Park-now tihrou\ing with ordinary (1hinese citizens. Similarly, a musical perinolmalce, this time a vocal concert at the Nationalities Palace of





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Culture, featured artists, and music, banned by Chiang Ching and her supporters.
Some of the cultural activities remained constant with China of any period, of course. No amount of ideology could prevent the Chinese or foreign friend alike from being impressed by the Great Wall, nor moved by the great human effort the Wall represents. Similarly, the Forbidden City preaches the message that the conspicuous wealth of China's pre-20th century rulers stemmed from the strength of the people--a message which both Chiang Ching and Teng tIlsiao-ping would agree upon.
TUNNEL
Two events in Peking stand out for their symbolic value, however. The first, more mundane, was the by now standard visit to an underground air raid shelter, perhaps "the" underground shelter, since no foreign visitor has evcr been taken to any in Peking but the Ta Sha Lan Street shelter under the tailor shop.' There, Mr. Kao, Chairman of the Air Defense Works of the area, explained how the series of cold, damp and still unequipped or stocked tunnels had been dug, starting in 1969, by volunteer labor by the residents of the street.
Members expressed doubt that the tunnel complex, presumably a prototype for similar tunnels throughout Peking and other Chinese ci ties, could actually withstand nuclear attack, or a sustained seige, Mr. Kao made the interesting point that the tunnel systems have been specifically designed to safeguard local populations for 1 or 2 days in the initial stages of an emergency, then to facilitate their evaculation to the countryside.
Whether or not the tunnel system could actually withstand an attack did not seem to be as important as the simple fact of the tunnel's existence within the context of the Chinese foreign policy line. At least on Ta Sha Lan Street, the message was loud and clear: "We are preparing, we are taking action to defend ourselves."
Another example of the hard work of the Chinese people being melded with a message-this time a message as close to the spiritual one is likely to find in China-came on the delegation's Sunday morning visit to the tomb of Chairman Mao.
Mao lies in state in a huge building itself dwarfed by Tienamin Square in Peking, site of the riots following Chou En-lai's death which led to Teng Hsiao-ping's purge by the "Gang of Four." Visitors and ordinary Chinese alike join separate but very long lines to enter the building, which greatly resembles the Kennedy Center in Washington. Entering the large receiving chamber, the stream of visitors divides to pass through doors on either side of a massive statue of Mao seated in a pose familiar to Americans from the Lincoln Memorial in Washington. Chairman Mao's remains lie in a glass coffin in the center of the main chamber, a velvet rope separating the uniformed honor guard from the viewers passing steadily by. Mao is dressedd in a light grey tunic, with the flag of his nation draped over his legs and lower torso. The atmosphere in the huge room is quiet, respectful, even reverential. It is a moving experience.
During Representative Wolff's 1976 mission, the delegation made an onsite inspertion of an extensive tunnel complex in Dairen. Manchuria, near the Sino-Soviet border. 2 By implication, the Chinese confirm suspicions that the tunnel program has not been as vigorously pursued as the Ta Sha Lan tour might indicate. In the defense "white paper" in the appendix, the author urges a renewed tunnel digging effort to create a modern "Underground Great Wall."





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Viewing the physical proof of Mao's passing brought home to the delegation that' fact the while the late Chairman's picture remains ubiquitous, he now shares billing with Premier Hua whose face also gazes down from the wall of every school and meeting room. Further, the "little red book" was no longer in evidence, except under glass in the hotel souvenir shops.
While in Peking, an important stop was the delegation visit with! Chou Pei-yuan, President of Peking University, and an afternoon visit to the University itself. The delegation also toured a rural technical university in Sian, and discussion of the university visits will be combined at the close of this section.

SIAN
Sian, the major city of Shensi Province, and site of the assembly plant for the British Spey jet engine, seemed a rural and dusty back country place after the cosmopolitan bustle of Shanghai and Peking. While the people still looked adequately housed, clothed, and fed, they and their area seemed very much closer to the earth than their more eastern cousins. They were also clearly more surprised to see foreign visitors, and at once more friendly and more shy than the people of cities more often on the foreigner's itinerary.
The visit to the Big Goose Pagoda, and the now world famous archeological dig at the tomb of China's first emperor, the builder of the Great Wall, Ch'in Shih Huang Ti, had the same theme as similar sites throughout the People's Republic: it was through the hard work, skill, and wisdom of the people that such treasures were gathered, and such wonders constructed, they survive as monuments to the Chinese people. The site of the Emperor's tomb is presently filled-in while the Chinese construct a building (large enough to enclose several football fields) over the estimated 6,000 ceramic warriors still guarding whatever remains of the body and treasure of the man who first unified China 2,200 years ago.
A relatively more recent cultural monument, reaching back only several hundred years, also had a modern message for the delegation, and that was the hot baths of the Dowager Empress. The famous "Sian Incident," where the Kuomintang's internal rivalries produced the kidnapping at the baths of Chiang Kai-chek by one ofhis own generals, is faithfully retold by Communist hosts. Experts in the delegation noted some slight historical editing, but the fact remained that after Chiang was detained, the KMT and the Communist Party joined in a more vigorous prosecution of the war against the invading Japanese.
CANTON
The delegationn only spent an afternoon and evening in Canton, but was able to tour the old waterfront area, site of the preliberation Euiropean "concessions." As our hosts stressed, Canton's importance to the mnodernizat ion of China is un(lerlined by the trade fairs held (liring t he ear-firs which even the "Gang of Four" did not haltat which Ch in ese economic indl industrial experts and officials mingle witi representatives of Western and Japanese enterprises.





53

PEKING UNIVERSITY AND CIHIAOTUNG UNIVERSITY) SIAN
The visits to these two universities have been saved for last in this
-brief survey of the itinerary because the importance of education in ,China's quest for modernization deserves the extended treatment which foreign policy and other modernization f actors receive in sections following this.
PEKING UNIVERSITY
Prior to visiting the campus of Peking University, the delegation met with university president Dr. Chou Pei-yuan, who greeted the members in his dual capacity as Vice Chairman of the Academy of Sciences.
Dr. Chou stressed the difficult times recently ended with the fall of the "Gang of Four," and went into some detail on how the life of the
-scientific and academic community had been disrupted during the entire period of the Cultural Revolution. Under the new leadership
-of Premier Hua and Vice Premier Teng, however, Dr. Chou expressed
-confidence that modernization plans would go forward
GOALS
Crucial to China's goal will be development of 800,000 new "scientific workers" by 1985, Dr. Chou said. (The Soviet Union now has some 900,000 such workers, and the United States 1.2 million, he said.) The Maoist injunction of "Let 100 flowers bloom. Let 100 schools of thought contend" would be the guiding rhetorical principle of the increased and improved research programs now being instituted. However, Dr. Chou said, primary emphasis will be on projects with immediate use to the agricultural and industrial community, rather than on more esoteric subjects.
As an example of the scope of programs China is developing, Dr. Chou mentioned the Yangtze River %-rrigation project under consid-eration for 20 years. The Yangtze project is so vast that the man-made lake which would be created by it was compared to the Mediterranean Sea by Dr. Chou. He said its size would be sufficient to produce actual climatological changes, as well as changes in the physical environment and local wildlife and fish population.
The visit to the Peking University campus was hosted by Professor Chang Lung-hsiang, a bi-o'chemist, several staff members, and a group of English language students. The students noted that English is now the primary "second language" being taught, rather than Russian.
Professor Chang gave the delegation an introduction similar in tone to that of Dr. Chou earlier in the day, stressing the difficulties imposed by the "Gang of Four" and the Cultural Revolution on the university as an institution, on the professors and the students.
PROGRAM
Now the university is engaged in a rebuilding program, and has defined its tasks into four major areas:
(1) Improve the quality of education. This will be accomplished
through reinstitution of the entrance examination, as Well as strengthening the theoretical side of instruction in basic sciences
and increasing lab work.





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(2) Strengthen scientific research in the university. In connection with this, a 3-year graduate study pro-gram has been restored.
(3) Mobilize the teachers' initiative by applying the party's
policy toward intellectuals. As an example, professorial titles have
been restored.
(4) Administration is to be a combination of the party's leadership and the University President's responsibility.
Professor Chan said that at present there are 2,800 teachers and staff and 6,400 st dents. Next fall, student enrollment will increase to over 8,000. It will rise to about 10,000 in 3 or 4 years, and eventually to 20,000. There will be 350-400 graduate students by late 1978. The number of day students is currently 200, and may be increased. There are over 160 foreign students from 36 countries, most of whom come to China under bilateral exchange agreements.
The curriculum consists of a required course of study for the first 8 years, with electives possible in the 4th year. All students, regardless of field of study, must take courses in philosophy, political economy, the history of the Chinese Communist Party, and a foreign language, which is usually English. Physical education is taken for 2 years. Each year a student will spend about 1 month in industrial work, agriculture, or military training-stints in all three are normally accomplished during a 4-year course of study.
Asked if any courses had been introduced or reintroduced into the curriculum since the fall of the "Gang of Four," one professor said there were many such courses, but named only psychology.
Asked about the present view of Confucius, Professor Chang answered that he had been "a reactionary." Another professor, however, broke in to'explain that while Confucius' thinking had been reactionary, there were many who held that he had made contributions in education and culture. This professor noted that the whole question was currently being discussed.'
Professor Chang was asked what, if anything, was being done about the many college graduates from the l)ostcultural revolution era
whose educational qualifications were deficient. Hle replied that many educational qualifications were deficient. Hle replied that many
measures were being taken. Those now on Peking University's teaching staff, for instance, are given only light teaching loads and are given the opportunity to restudy. Remedial English classes are stressed. Also, more of these graduates have been hired by the university in recent months.
Given an opportunity to ask questions, one professor asked how the United States had managed to acconlmodate the large increase in student enrollment after World War I. It appeared the Chinese felt they were faced with the same task.

CHIAOTUNG UNIVERSITY
The delegation visited Sian's (Chiaotung University on July 11. Our host was Chuang Li-ting, vice president of the university. He explained ihat his school was an offshoot of Shanghai's Nanyang University,
3 The evhiinge wat s nt worthy a an ilistration of tho dlfhcult v even very -Owhi Iated Chinese mIust have had following the latest "line" handed down under the "Gan of Your., or du ri ng th ( uIltu ral Revolution. Crit cism of ('CIonfucits was begun n a w:y of rlritziing ChouI E -ll. ''en s IIsino-pig's patron. anid a would-he nimoderniver. Thus today the criticism of Confulins implies critic ni of T u'ng.





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which had later had(l its name changed to ('Chiaotm un. Part of it was moved to Sian in 1956. A polyteclmic 1ilniversity, it has lepartfmenlts of mechanical engineering, electrienl engineering, m(lio enineering aiUnI power engineering. It is one of the 8s "key" univel ities under the direct authority of the Ministry of E(lucat ion.
The school has a library of 900,000 volumes, which was in heavy use on the d(lay of our visit, since it was the week before final exam .
The university has 1,400 teachers and 3,400 stu(lents, down from the precultural revolution student peak of 8,000. The present p)lan. is to increase enrollment by 1,000 a year until total enrollment reaches 10,000. Of last year's intake of 1,000 new students, about half were from Shensi Province and half from elsewhere.

APPLICANTS
In Shensi Province, 200,000 applicants took last year's college entrance examination. Of these, only a little over 10,000 succeede l in gaining admission to some university.
Professor Chuang mentioned that it was still possible to enter the university without taking the examination. For instance, someone in his thirties, too old to qualify for the examination, might gain entry by writing a type of dissertation to prove his intellectual abilities.
The graduate student program at Chiaotung is just beginning. The school will take in about 100 such stu(lents this year. Admission is through a series of examinations, administered (directly by the university.
Professor Chuang mentioned that the size of many classes was rather large, because they were being taught by the most experienced[ teachers. In previous years there had been a sort of "track" system, since the backgrounds of the students were very uneven and some could study faster than others. Now that enrollment is based on standard examinations, Chuang felt that such a system may no longer be necessary. Language instruction, however, still required differing levels of courses.
Professor Chuang stated that most of the teachers had been trained before the cultural revolution, had a good academic background, but were now growing old. They also feel they have not been able to keep up their scholastic credentials in the past 12 years. The university is now providing teaching assistants to the older professors to ease their load. Supplementary training is being given to teachers of the middle generation. There is a particular emphasis on language training, since Russian is the most common foreign language among the older generation and there is a need for competence in English, Japanese, German, and French.

MODERNIZATION
In addition to these problems, Professor Chuang mentioned that two areas where improvements were needed were the modernization of facilities and reform of the education system itself. The school's electronic instruments, computers, and so on, were all old and largely out of date, and needed to be replaced or supplemented. While he did not explain what he meant by educational reform, he stated that





56

they were currently studying foreign models to see how they might organize themselves differently. One thought, for instance, was that they should reduce the number of specialties offered at the school.
There are present ly no foreign teachers at the university. They would be interested in visiting American professors, however. In fact, this question has already been proposed to the Mimistry of Education, which is responsible for such arrangements.
In a subsequent private conversation with one of the university officials, Congressman Winn asked what was the advantage for the United States if we started student exchanges with Chinese universities. The official replied that the Chinese were not really interested in student exchanges as such, but in getting U.S. professors to teach in China.
The delegation noted, however, that university officials in both Peking and Sian were much more open in discussing the possibilities of cooperation with, and learning from, foreign countries than had been the case on previous visits, as indicated by the official mission reports. As this reports in preparation, the United States and the Peoples' Republic of China announced a student exchange program which will send 500 Chinese students to the United States as the first part of what may eventually be a 20,000 student "delegation" throughout the West, with 5,000 to the United States, and 2,000 to
4
Japan and Britain.
4 Article "Replacing a Lost Generation" by Melinda Liu, Par Eastern Economic Review, Sept. 15, 1978.











SUPPLEMENTARY ANALYSES

PRC IFomuIGN POrLiCY
W hile experts may differ on the degree to which China's domestic policies reflect concern over the Soviet Union, the Soviet basis for China's frimpolicy is clear. The delecration was repeatedly told that combating what the Chinese see as the worldwide aggressive aims of the U.S.S.R. must be the common foreign policy aim of the PRO, the United States and our various friends and allies.
]RECENT INITIATIVES
In recent months, Chinese foreign policy initiatives and accomplishments include:
(1) Premier Hua Kuo-feno-'s tour alonu the southern border of the Soviet Union, with stops in Romania, a Warsaw Pact member, Yuo-oslavia, long at odds with Moscow as a "nonalined" Communist nation, and Iran, an arch-foe of Soviet aims in the oil-rich Middle East, and on the subcontinent.
(2) Signing of the Sino-Japanese Tr'eaty of Peace and Friendship in several months of concentrated effort, after 6 years of difficult talks. Tphe treaty includes the clause demanded by China opposing "hegemonism," the code word for Soviet influence in Asia and elsewhere.
(:3) The announcement by Vice Premier Teng that China would not renew the 1950 Sino-Soviet pact when it comes up in 1979 (a move related to the Sino-Japanese treaty because of anti-Japanese sections of the 1950 treaty).
(4) Strengthened efforts in African affairs, reaching up to improved relations in North Africa and the Middle East. Diplomatic relations were opened with Libya, a longtime Soviet ally, and Oman, a Persian Gulf state previously branded a "reactionary" regime.
(5) Improved ties with the Western European nations, particularly in trade areas, but also through military missions to the NATO alliance.
(6) A visit by Premier Hua to North Korea prior to his European swing.
(7) As the delegation's report has indicated, a renewed Chinese effort at improving the substance of relations with the United States through trade, exchanges and strategic consultations is well underway (despite the absence of formal relations.
The importance placed by China on signing the Treaty of Peace and Friendship with Japan has been frequently noted in this report. To (late, no active Soviet response against either China or Japan has occurred. Moscow has limited itself to harsh rhetorical comment in print, and over the airwaves.
The Japanese treaty, one of two events the delegation was informed were "the two things Moscow fears most," left the formal normalization of relations with the United States as the remaining
____ (57)
35-200-78-5







major foreign policy goal discussed with the delegation. As indicated in the delegation's conversations with Chinese leaders, normalization was consistently described as a key to resisting Soviet activities against China and the United States.
U.S. SUPPORT
With or without normalization, however, China has made it clear that it desires U.S. support through parallel actions in the world arena such as the NATO alliance. China sees competition against the Soviet Union, despite Western pursuit of detente, the SALT talks, and extensive trade and technological exchange, as perhaps the key element in any potential relationship between China and a third party.
For the United States, Chinese leaders repeatedly warn against being misled by detentee," predict no useful, and many dangerous results from the SALT talks, and even inveigh heavily against the utility of trade and exchange with Russia.
In his conversation with the delegation, Ambassador Hao Tehching, President of the People's Insitute of Foreign Affairs, articulated a theme (repeated in other meetings) that the United States should adopt China's "three methods" in dealing with the Soviets:
(1) Have no illusions, make concrete preparations against war;
(2) Move to upset all Soviet strategic deployments;
(3) Do not adopt a policy of "appeasement" which neutralizes military and strategic strength.
Amlbassador IHao frankly stated that China's policy toward Vietnam was d(esioned to "upset" the Soviet Union, on the theory that Vietnam, for all of its traditional interests in the region, is now basically a client of the Soviet Union.
Vietnam is Russia's "Asian Cuba," the delegation was repeatedly told. "Of course" China's Vietnam policy is aimed at Russia, Ambassador Hao said: "On the surface we are struggling against the small hkg.m-onist power, Vietnam, but in reality we are struggling against the bigger hegemonist power."
Facing the "reality" of the struggle against Soviet policy prompted Chinese officials to recite a litany on how they viewed Soviet activity around the globe. Beginning with Cuba itself, "right under your nose," Chinese officials cited Africa, particularly Zaire and Ethiopia, the Iiddhl East, focusing on South Yemen, and exhibited great concern over the coup in Afghanistan. Vietnam was portrayed as an active Soviet base threatenlling Western trade and military communications in Southeast Asia, as well as with Japian and the Pacific.
While the delegation meetings stressed the need for parallel action by the United States, in recent months, the PRC has actively pursued a pattern of diplomatic initiatives which would appear to be unparalled in her history.
BREAKING ENCIRCLEMENT
As one senior (hinese official put it, "There is some talk in the world that the Soviet Union is encirc Iiig (hina, but. China is not afraid of encirclemlent. When you look at the history of the Chinese revolution we have grown in periods of encirclement, and have broken a lot of
hen is thirclement "rk eircts" old see to provide the
This theme of "breaking encirclenients"' woul seem to provide the





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best framework for charting the series of moves including diplomatic missions culminating, to date, in Premier Iua Kuo-feng's "campaign swing" along Russia's southern flanks.
Premier Hua's stops in Romania, Yugoslavia, and Iran were all punctuated by anti-Soviet speeches of varying degree, arnid calls for recognition of common interests in resisting "hegemonism," the wellknown key to the Sino-Japanese peace treaty.
However, while Premier Hun's visits received worlwide publicity, they were only the latest in an ongoing series of personal diplomatic initiatives by senior PRC officials. Among the more significant were:
(1) Foreign Minister Huang-hua visited Zaire for conferences with President Mobutu in June, e' en as France and Belgium were moving to counter Cuban-Soviet military ventures in Shaba Province. The Foreign Minister also visited Belgium, Turkey, and Iran, making speeches identical in tone to those heard by the delegation, and those delivered by Premier Hui-I on his August mission.
(2) Vice Chairman ('i Peng-fei of the National People's Conference visited South Anerica in June, one of the only such (Chiinese visits on record. Before journeying north to Canada, Chi spent a week in Mexico.
(3) Vice Foreign Minister Ho-ying toured Kuwait, Jordan, and Syria in late June.
(4) Vice Premier Kane Piao, a Politburo member, spent 29 weeks in Pakistan and Sri Lanka in June-July. In late July, he left for a 15-day Caribbean tour of Trinithad-Tobaoo, Jamaica, and Guyana. No Chinese Vice Pi'emier had ve-r visited this reon.
(5) Vice Premier Chen Mu-hua, a foreign trade expert and head of Peking's foreign aid program, was in the midst of an African mission as this report was in preparation. Stops at that time included Somalia, Cameroun, and Gabon. Expected stops included Senegal and Mauritania.
Chinese diplomatic missions scheduled as this report was being prepared included stops in Turkey, Egypt, Sudan, Ghana, and Guinea. In addition, Vice Premier Teng was scheduled to visit Japan during October, and Premier Hua to visit Western Europe in 1979.

THREE WORLDS
The policy lines expressed to the delegation, and confirmed by Chinese actions in 1978, would seem to be signaling a modification, if not a shift away from what had been presumed to be a cornerstone of Maoist Chinese foreign policy-the so-called "three world's theory." The delegation has expressed its conclusion that the current underpinning of PRC foreign policy is what the Chinese see as the need to combat the Soviet Union on a worldwide basis.
But under Mao's "Theory of the Three Worlds" the Soviet Union is not the sole target of Chinese activity. According to Mao, the world is divided into three competing "worlds," or categories: The first world of the two superpowers, the Soviet Union and the United States; the second world of the remaining industrialized nations: and the third world, including China, comprised of all the developing nations. While Mao saw the United States as the more "benign" of the two superpowers, with the Soviets characterized as "arch social-imperialists,"





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the task of Maoist foreign policy was primarily to rally second world nations into an alliance with the third world against the superpowers, even though the second world nations themselves "exploit" the third world.
While Mao felt the United States might be "enlisted" in the struggle against the Soviets, the foreign policy trend perceived by the delegation-when coupled with the trade and economic initiatives now being pursued by China-would seem to signal a potentially much more positive Chinese view of the Western nations.
Some experts have commented' that to date, PRC diplomatic missions have concentrated on the "third world" nations; thus, the 1978 initiatives may represent as much an effort to enhance Chinese political and economic influence in its own right as they signify an anti-Soviet campaign.
SOVIET RESPONSE
In this sense, experts note, Western decisions to help meet what are )erceived as common foreign policy aims by selling arms or sophisticate(t technology to China will serve a dual function, despite the West's purpose. Soviet response to Chinese initiatives and possible Western responses have so far been largely rhetorical, and have sought to stress the idea that helping China is a double-edged sword. A Pravda editorial has warned:
All those who help China to arm itself are acting contrary to the striving of peoples toward detente and toward strengthening peace on earth.2
The editorial was not simply concerned with prospective European
arms sales, as it made clear by adding:
Hardly a month passes without another Chinese emissary appearing in the capital of one or another country, whether belonging to NATO or not.
It is within the context of the Sino-Soviet struggle as manifested in the ideological debate over Mao's "Three World's" theory that China's break with Albania-once its only European ally-can be explained.
Exactly 1 year prior to China's July 7, 1978, announcement that all aid to Albania would be ended, the leaders of the small, Adriatic Sea state between Greece and Yugoslavia called the "Three World's" theory a cover for Chinese "hegemonism," and Chinese plans to become a superpowerr."
Even worse, according to the Albanians, the "Three World's" I heorv was designed to cover a Chinese plot to ally with the "U.S. impeIialists and the monopolists of Europe, with fascists and racists, kimI s and feudal lords, most rabid militarists and warmongers * *" 3
TJ'he Albanian charges, coupled with Soviet reaction to Premier I lit's European mission, showed the depth of displeasure motivating j)ol1 l leadei(ters and strategic planners in Moscow, if not elsewhere.
It 8hotl(1 be borne in mind that the Sino-Soviet "war of words" ca.n11m1L be brushedl asil(le as mnere rhetoric. For example, as noted, the
1,siaweek (f Dec :t. 1977 and Aug. 25, 1978.
l :iltit lmnore Sun arile by HIenry Trewhitt, Aug. 25. 1978.
: Ta ken fromi I lolter cilrculamted in foreign capitals by Albanian diplomats with the date July 197S. as quoted by Asiaweek of Sept. 1, 1978.





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Chinese consistently warned the delegation against the pursuit of definitive SALT talks with the Soviet Union. The Soviets, too, Ii:1ve cited SALT as a factor in United States-China relations, althoui-h from a reverse perspective. On August 26, a statement from tie
Politburo called China a "serious threat" to peace, and hinted that a SALT agreement could be washed away by Western military sales to China.4
ARMS SALES
As of this writing, Chinese military missions to Europe and the NATO countries have reportedly conchlded agreements with France for antitank and antiaircraft missiles, Germany for helicopters, an( Britain for jet engines. PRC missions have reportedly expressed
interest in the West German Leopard tank, Italian rapid-fire artillery systems, the British Harrier vertical-takeoff jet, and British transport aircraft with military capacities.
The French purchase is the largest reported to date, covering perhaps as much as $700 million.5 The French deal, negotiated despite reported Soviet "pressure," was noteworthy because of public French statements that France would sell arms according to its own policies, regardless of outside pressure. The same report, however, also noted that the French apparently plan to sell only what they feel are defensive weapons, and that no deal was made on the sophisticated Mirage F-1 jet fighter precisely because of concern over FrancoSoviet relations.6
While the United States is reported as having "quietly made it clear it will not oppose such sales to China by European countries," the nations of Europe have yet to develop, or at least announce, a clear policy on the sales.7
No such indecision is reflected in Moscow. In expressing displeasure as of August 26, well before the announcement of the French sales, the Politburo reversed the language of the PRC to the delegation. Arms sales discussions, the Sino-Japanese treaty, and Premier Hua's Eastern European mission prompted this from Moscow:
The Politburo underscores the serious threat presented to the cause of peace and socialism by the action of the current leaders of China. In pursuing their great power, hegemonic course, Peking openly places stake on the increase of international tension and is using all means to undermine the position of the socialist community.8
As noted, Ambassador Hao freely admitted to the delegation that China's Vietnam policy is anti-Soviet. The Politburo statement from Moscow linking the future of SALT to Western arms for China also called China's Vietnam policy "direct expansionist action."
Thus, the delegation and Western decisionmakers face a situation where each side in the Sino-Soviet dispute makes similar charges about the other and demands potentially contradictory actions by the West as the price of friendship.
Washington Post article by Dusko Doder. Aug. 27, 1978.
5 Reuter's item in Washington Post, Oct. 21, 1978.
Christian Science Monitor article "France Moves Ahead on China Arms Sales" by Jim Browning, Oct. 24, 1978.
7 Oct. 24 article in Christian Science Monitor.
8 Aug. 27, 1978, Washington Post article by Dusko Doder.





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NORMALIZATION: PRC AND THE ROC
The delegation has sought to stress its perception of a "new realism' in the People's Republic of China regarding the issue of American concerns and interests with the Republic of China (Taiwan). Discussion of the fact that the Kuomintang and the Communists twice in their history had cooperated was clearly intended to make an impression on the delegation.
In its report, the delegation has also sought to make its own historical reference to the dispute over the Republic of China, particutirly the 1955-56 offer by the PRC to negotiate a treaty with the United States which would include a clause on peaceful settlement of the Taiwan issue.
As we have said, the 1955-56 offer and negotiations made it clear that while the PRC might be prepared to renounce the use of force vis-a-vis formal U.S. interests, their position in 1955-56 and 1978 on Peking-Taipei relations is identical; namely, that "sovereignty" prevents any pledge of nonviolence.
As stated, the delegation is under no illusions as to the continuing strong line in Peking regarding the legal form of normalization between the United States and China-as seen by Peking. However, the delegation has sought to emphasize why it feels that even though the PRC indicates its "three points" (involving formal U.S. withdrawal from diplomatic and military agreements with the Republic of China) are nonnegotiable, in practical fact, the substance of normalization-the "realities" and "modalities" discussed in Peking-may hold promise of flexibility, and should be explored.
A joint appearance by representatives of the PRC and ROC at a scientific conference in Tokyo took place on August 24. This is the first such recorded occurrence of its type. In the past, even if both the PRC and ROC had accepted invitations, one or the other had cancelled in order to avoid just such a joint appearance as occurred in Tokyo.
Recently, a solid economic indicator of pragmatism, at least on the part of the PRC has come to light. According to official trade statistics released by Hong Kong, pro-Peking businessmen in the British colony have been encouraged to reexport goods to Taiwan. Fi,,res for January to iay 1978 show $16.1 million in goods reaching Taiwan from the PRC, via Hong Kong. Experts have noted that these figures d(lo not reflect the "substantial" amount of PRC goods smauegled into Taiwan
.6 the (dele nation has noted, an emerging pattern of more pragmatic, more( realistic approaches and actions by the PIRC, not just in foreign poiy, bt in Ill areas o11 w N ld seem to be underway. Further, this pat e'nt h s h i s th i-alC I I)re( le1t.
A for the R((, w ile no sch pMt tf'rn c!n be discocernled at present (on i e ofli(inl PvCl, the fet remains that her dlelgtes were not ree ied Lro()n Tolv(). It is true that when the delegation's initial )10S 011OeftU ggest~ a posile willingness on the part of
)ekjw to negotite with the Kucnintang, negotiations were rejected out right by officials iI Tii. This is consistent with policy in Taipei
- ine 1 o19. But it is 8i:-o iru.e t hat despite the oflten harsh rhetoric
\ tile Ii It th Econom ist, "VYlvet )(ol vry," Sept. I 1 77R: Fnr Eastern Econonic Reviw. "Tulwan's Secret 'Pence' With the Mainland," by MelInda Liu, Oct. 6, 1978; and Asi:wek, "Autumn Fever," Oct. 1., 1978.





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still employed by both sides in the Chinese Civil War, no serious military action between the two has occurred for 20 yea rs, pisoner0 exchanges have taken place, and informal recognition of each other's airspace for military and commercial flights clearly exists.
In the following section, a review of the respective positions of leaders in the PRC and the ROC on the normalization issue since 1971-72 may help those attempting to analyze the events of the present (lay.
As noted, in 1956, Peking suggested a bilateral agreement with the United States specifically renouncing the use of force in the 'aiwan area. While such action in 1978 apparently cannot be expected, if the tone and content of the delegation's conversations in Peking continue to represent Chinese policy regarding the use of force, the historical fact remains that at least once, Chairman Mao and his associates were willing to explore such a proposal.
PRE-1972 PRC VIEWS ON NORMALIZATION
During the period prior to President Nixon's visit to Peking in 1972, PRO spokesmen had remained rigidly uncompromising on the subject of normalization and had refused to ease tensions with the United States unless the United States first withdrew its forces from Taiwan and ended official ties with the Taipei Government.
Since the signing of the Shanghai communique during President Nixon's visit to Peking in 1972, PRC spokesmen have reaffirmed their demand that the United States must withdraw all forces and break official ties with Taiwan before full United States-Peoples Republic of China diplomatic relations can be established. But Peking's sense of urgency over the normalization question, and its concern over the related issue of the "liberation" of Taiwan, have varied widely over the past 6 years.'o
During 1972 and 1973, PRC spokesmen adopted a low-keyed approach on normalization. Despite continued active U.S. official relations with Taipei, Chinese leaders agreed with the United States to increase bilateral exchanges and to establish official liaison offices in Washington and Peking staffed by senior diplomats. Peking media avoided criticism of the United States over the normalization issue, and they softened past rhetoric regarding Taiwan. In particular, Peking comment encouraged "people-to-people" contacts between the mainland and Taiwan, sharply reduced criticism of the Nationalist administration, and-for the first time in two decades-called for peace talks with the Nationalists and the "peaceful" liberation of Taiwan.
China's approach hardened in 1974 and 1975. Some experts feel this reflected Chinese impatience with the lack of forward movement in Sino-United States relations during that period. However, China's posture also appeared to have been influenced by PRC domestic politics, as leftist Chinese leaders-the now smashed "Gang of Four"fomented major domestic ideological campaigns which led to a harder line in Peking in foreign policy. During this time, Peking spokesmen occasionally criticized the United States for not living up to the "spirit" of the Shanghai communique. They also put aside their
1" For background on these issues, see Dr. Robert G. Sutter, "Chinese Foreign Policy After the Cultural Revolution, 1966-77," Westview Press 1978, pp. 94-113.





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previous, relatively mild approach on Taiwan's liberation, and began to warn that Chinese Armed Forces were ready to attack the island.
Peking's policy appeared to shift again in the latter part of 1975, when spokesmen reverted to a more low-keyed approach regarding Taiwan. Chinese leaders at the same time showed great concern over what they saw as a decline in U.S. strategic resolve to resist Soviet "expansionism" in international affairs. They saw the decline as resulting from American domestic and foreign difficulties such as the U.S. Watergate crisis, the 1974-75 economic recession, and the collapse of the U.S.-supported governments in Indochina in 1975. Accordingly, Chinese spokesmen took pains to emphasize their interest in a more resolute U.S. policy against the U.S.S.R., while they "softpedaled" past expressions of concern over the normalization of United StatesPeoples Republic of China diplomatic relations.
TENG IN 1975
Vice Premier Teng Hsiao-ping was unusually explicit about Peking's priorities during a December 1, 1975, banquet address for President Ford. While Teng devoted only routine attention to United StatesPeople's Republic of China normalization, expressing confidence that diplomatic relations would be established "eventually," he devoted unusual stress to what he called "a more important question" involving the need for greater U.S. vigilance against Soviet "expansion." He said that "the crucial point is what line or policy" the United States and China would pursue in the face of this mutual threat. He exhorted the United States to follow Peking's example, not to fear Soviet "hegemonism," but to form a broad international front against it and to wage "tit-for-tat struggle." 11
Teng was demoted in early 1976, leading to the temporary rise to power of the leftist "Gang of Four"-a development which apparently lead to a hardening of Peking's line on normalization. Thus, for example, Senator Hugh Scott was strongly impressed with the virulence of Chinese discussions on normalization and the liberation of Taiwan during his July 1976 talks in Peking with Vice Premier Chang Chunchiao, a prominent member of the "gang." 12 Chairman Wolff and Representative Burke, during their April, 1976 mission, received what may have been the "dress rehearsal" for Senator Scott."

"GANG" PURGED
The purge of the "Gang of Four" and other leftists in October 1976 resulted in a return to a more moderate approach toward the United States. For several months in early 1977, Chinese spokesmen repeatedly made statements underlining Peking's firm commitment to the three conditions for United States-People's Republic of China normalization-statements which were perhaps prompted by the repeated suggestions then emanating from Washington regarding poSSible
compromise formulas for United States-People's Republic of China nolrmalizat1011ion.
New China News Agency. Dec. 1. 1977.
2 "N(rmalization of Itfelations with the PRC: Practical Implications." Hearings before the. Subconimlittee oni Asian and Pacific Affairs of the Hlouse Committee on International Relations. U.S. Governmnielnt Printing ()fflie. 1977. pp. ::22 :140.
See "United States-C hina : Future Foreign Policy Directions, 1970." Subcommittee on Future Foreign Policy, USGPO.





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Since the middle of 1977, Peking has avoided criticism of the United States concerning the normalization issue and has repeatedly expressed understanding and patience over the difficulty the United States faces in breaking its ties with Taiwan.14 A high-level Chinese leader this year went so far as to alert the Chinese people that he judges that normalization may be delayed. Yeh Chien-ying-the second most important leader in the Chinese Communist Party-capped an eftiusive welcome for a group of U.S. visitors on May 19, 1978, by remarking in a straightforward passage that "it requires great exertion and time to realize the normalization of relations between China and the United States." Yeh's remarks-the most explicit Chinese official statement of the potential delaying effect of U.S. domestic political concerns were widely broadcast to Chinese and foreign audiences by Peking's New China News Agency.15 At the same time, Chinese leaders have used private meetings with U.S. visitors in recent months to reaffirm repeatedly Teng Hsiao-ping's admonition to the United States in 1975: They have noted that the formal establishment of United StatesPeople's Republic of China diplomatic relations is less important to China than the development of a common Sino-American strategy against the U.S.S.R.8
THE REPUBLIC OF CHINA (TAIWAN) -AND NORMALIZATION
ROC leaders have also adopted various approaches to the issue of United States-People's Republic of China normalization in recent years.7 Some officials have expressed confidence that the United States would soon perceive the alleged "futility" of trying to normalize relations with Peking, and would halt the process before it seriously compromised United States relations with Taiwan.
Other officials of the ROC have been less sanguine about future developments, and have shown serious anxiety over the possibility of the United States accepting Peking's three conditions. They have warned that U.S. support for Peking's terms would result in major political and economic crisis on Taiwan. They judge in that United States-People's Republic of China normalization would lead to a collapse of the Republic of China's political institutions,rand would prompt the Nationalist authorities to adopt strong authoritarian measures in order to maintain order and unity on the island in the face of "threat" from the mainland. As mirrored by some witnesses before the subcommittee, these officials also warned that following an official U.S. break with Taipei, businessmen on Taiwan would withdraw from the island, leading to a major economic collapse-there.4
Still other leaders on Taiwan think that normalization is likely to occur in the near future, but judge that it would not have serious adverse effects on Taiwan's well-being, provided there were no immediate likelihood of a PRC military attack against the ROC. These spokesmen point to the recent record of Taiwan's economic development; they note in particular that the economy grew substantially
1 On the latter point, see Senator Cranston and Representative Whalen. the Tnited States and the People's Republic of China, Report of the Sixteenth Congressional Delegation to the PRC. U.S. Government Printing Office, 1978, p. 13. 1- NCNA, May 19, 1978.
1G See in particular the Cranston-Whalen report. 17 'ee "Normalization of Relations with the People's Republic of China: Practical Implications," hearings before the Subcommittee on Asian and Pacific Affairs, U.S. Government Printing Office. 1977.






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during the early 1970's, even though the Taipei Government had suffered numerous serious political and diplomatic setbacks during that period. They believe that Taiwan's economy would probably continue to prosper, even after United States-People's Republic of China normalization.
In regard to political stability, these spokesmen point out that the political setbacks Taipei suffered earlier in the 1970's can be viewed as having had an overall positive effect on internal political stability in the ROC. The reversals caused the dominant group of Chinese leaders on the island, who came to Taiwan from the mainland in 1949, to open some higher government positions to Taiwanese. These moves they claim, have helped ease the political discontent of the Taiwanese natives, who make up about 85 percent of the island's population and have been particularly resentful over their past inability to play a major role in national governmental affairs.
TRADE AND ECO-oiIC DEVELOPMENT IN THE PRC
Even as our delegation met with the PRC's leadership in Peking, lower ranking bureaucrats were engaged in detailed negotiations with trade and business representatives from Japan, the United States, and Western Europe.
The Vice Trade Minister made clear to the delegation what has become strikingly evident in the weeks since our visit-China plans to substantially increase her imports and exports, with equally substantial implications for China domestically, as well as for world economies.
According to statistics released as this report was in preparation,s United States-China two-way trade increased 175 percent in the first 9 months of 1978, compared to a similar period in 1977. In absolute terms, the sums involved-$441.4 million in 1978 versus $249.4 million in 1977-are not substantial. As with other Asian nations, the United States ran a trade deficit with China for the first half of 1978, with U.S. imports of Chinese goods totaling $246.9 million.
The initial phases of the 1978 increase are attributed to the fact that for the third year in a row, China in 1977 experienced a bad harvest. Consequently, the Chinese have reentered the U.S. grain market for the first time in 4 years, purchasing $280 million in shipments to be spread out over 1978-79. Another bad harvest has been announced this year, and( further grain purchases were being discussed as this report was in pi)re)aration. Funds for these grain prchases extend into (China's hard currency pool, and may affect the PRC's ability to pay cash for development programs beyond the immediate future.
WORLD TRADE
Foreign analysis of China's econoImy indicates that the PRC's worldwide trade for January to June 1978, reached $19 billion, a 30pwrccnit increase over the 1977 totals. For the first half ot'f 1978, Chinese econo1Ii<: officials did not issue ab)solulte figures, but indicate a percentage increase in cxpl)orts of 28.5 percent, and a 60-percent import
19

'Stntistics through September 1978, compiled(l by the National Counlcil for United States-China Trade.
Washington Post article "China Doubles Trade With Ullited Stats, Conswiders Foreign Capital," by Jay Mathews, Sept. 10, 1978, arlicle in Astaweek, Oct. 13, 1978.





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A comparative note of caution: While the "China trade" dollar amounts are relatively large, and will grow larger, t he Iact rent: ns that in 1977, Japan, for example, still exl)orted more to the Repui)lic of China (Taiwan) than it did to the PRC.
But if current PRC plans take firm root, foreign trade will incrose rapidly both in percentages and absolute dollar amounts. At a conference on finance and(l trade in Peking shortly after the d(eleat ion departed, Vice Premier Yu Chiu-li, Chairman of the State Planiing Commission, announced that special factories and industrial areas would be set aside to produce export goods. In a significant break with past PRC policy, it was announced that these plants would import basic technology and equipment. Of perhaps more interest at th time of the announcement, it was noted that among the devices planned to finance the plant would be so-called "payback" schemes modeled(l on development policies carried out by Lenin and Stalin in 192)'s Russia.
"Paybacks.," in which the plant's products are used to pay oiff development costs, seemed earlier this year to be an emerging Clinese preference to financing industrial modernization and expansion throw igh direct loans. In that way, it was thought, China hoped to avo*. the economic graveyard inhabited by so many other developing nations. Chinese leaders were obviously mindful of the Russian experience of recent years, where despite rhetorical or ideological inhibitions, the Soviet Union managed to run up a foreign debt of some $17 billion.
DEVELOPMENT CAPITAL
But if China remains committed to pay for most of its short-term imports in cash or "payback" agreements, the ambitious development plans now being announced in response to the strategic challenge of the Soviet Union have clearly prompted a reassessment of how best to generate long-term development capital.
Expert observers had estimated that with hard currency reserves of between $3 billion and $4 billion, the PRC would be able to finance its presently announced development plans without any loans for 1 to 2 years.20
Events since the delegation's visit moved more rapidly than any of the experts had predicted, however, and it is now a matter of record that the PRC has decided to explore direct loans to finance those development plans which cannot be funded by paybacks, or other methods. In retrospect, it can now be seen that this decision, which became public during September negotiations with the Japanese, had been publicly anticipated by PRO leaders.
Vice Premier Yu Chin-li, at the Peking Conference on Finance and Trade, noted the need to "receive and use foreign deposits in a planned way." 22 An explicit statement on China's willingness to accept private bank loans was attributed to Vice Premier Li Hsien-nien.23 Earlier sources indicated Chinese willingness to accept private bank loans through the Japanese Export-Import Bank, although not official
Washington Post article "China Doubles Trade With United States," by Jay M.tew., Sept. 10, 1978.
1,2 Oct. 13. 1978 article "Peking's Yen for the U.S. Dollar." in Fzr Eastern EcoT1wniC Review; in a perhaps ironic footnote, the PRC reportedly has asked that the Japanese loan be made in U.S. dollars. even though the interest rate would be higher, because of the difficulty of meeting payments in yen over the years. SWall Street Journal article by Frank Ching, "China Hints at Economic Policy Change" Aug. 25. 1978.
2 Wall Street Journal article by Frank Ching.







Japanese Government loans through Japan's Overseas Economic Cooperation Fund.4
In any event, a long-term trade agreement between Japan and the PRC announced in February has been consistently estimated to involve $20 billion.
While loan negotiations with the Japanese were still being carried out, British banks had already established a $100 million deposit, called by some observers "akin to a line of credit," to finance British exports to China.25
This device of allowing buyers and suppliers export credits is also new for PRO policymakers, one which allows them the benefits of direct loans without undue ideological risks to a development policy which has by no means rejected all aspects of independence and self-reliance.
To show the level of commitment already undertaken by China in the last few months, a quick survey of three basic industries-steel, petrochemicals, and oil is instructive:
(1) Steel.-Of China's planned 120 major new industrial projects by 1985, 10 will be steel mills large enough to process raw ore into finished products. The Chinese plan to nearly triple the 1978 output of 26 million tons. Without commenting on the feasibility of this plan, experts estimate that it will cost China some $2 billion to upgrade existing steel mills with techniques and equipment available in the West. Further, anywhere from $20 billion to $40 billion may be necessary to finance construction of the 10 new plants called for by 1985. West German and Japanese firms are already in competition for the first installments of this massive project.6
(2) Petrochernmicals.-As of January 1978, more than 30 petrochemical and fertilizer plants were being built in China by Western contractors. Much of the expertise and technology involved in these projects are under license by the major chemical manufacturers of the West.
Since the beginning of July alone, at the same time the delegation was in the PRC, seven petrochemical or fertilizer projects have been announced, with the total value of more than $300 million. Four of the projects went to West German or Japanese firms.
Experts note that Chinese missions in Europe as this report was in preparation were discussing short-run PRC needs for seven petrochemical or fertilizer plants, and longer range needs for six large ethylene crackers (the base unit around which a petrochemical complex can be constructed). While the Chinese planned to do as much of 1 he basic site work as possible, each of the plants could cost up to $500 million.27
(:) Oi.--In the past several months, PRC representatives have neot i ated with I U.S. oil companies for up to a half-dozen offshore drilli g rigs. Prices per rig are in the $75 million range.
('hina now has an estimated offshore oil reserve of 45 billion barrels, with a reserve on the mainland variously estimated at another 5 to 20 billion harrels. (Sundi reserves are estimated at 149 billion barrels.)
In 1977, thle PRC exported some 1 30,000 barrels of crude oil a d(ay to Japan. Shortly after our delegation returned to Washington, China
\~ o'w- York Ttws article by HT. Scott-Stokes, "China Strengthens Ties With Japan," July 23. 1978.
The Eeononnist,. London, Aug. 19, 1978 .
A Art Icl, "Chinn: Oiling the Doors," in the Economist. Aug. 19, 1978. SArticle in the Econonmist, "Olling the Doors," Aug. 19, 1978.





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and Japan announced an agreement on joint development of oil resources in Pohai Bay, directly across from the Korean Peninsula. The same announcement by the Japanese Government-owned National Oil Corp. said agreement has also been reached to study feasibility of joint development of oil resources at the mouth of the Pearl River, which flows through Canton into the South China Seai.
The Chinese do not restrict their potential oil development to J.apan. As noted, while the delegation was in Peking, members and staff met informally with representatives of several major U.S. oil companies. It was subsequently reported that on May 2, the Liaison Office of the People's Republic of China in Washington, D.C., called Ambassador Christopher Phillips, head of the National Council for United StatesChina Trade, asking him to deliver official invitations to the heads of Exxon, Pennzoil, Union Oil, and Phillips Petroleum. 28
In 1977, Peking purchased $150 million in onshore oil exploration and development tools from U.S. companies for use without outside help. The first half or 1978 saw $250 million purchased from U.S. companies. Negotiations between the PRC and the four American companies invited to Peking at the same time as the delegation were still in progress as this report was being prepared. Results of the negotiations should provide evidence for how much foreign participation the PRC plans to allow, as well as indicating how much "prenormalization" trade the United States might expect to carry out with China. 29
MODERNIZATION: THlE WORKERS AND THE PEASANTS
All of the PRC's ambitious development plans will come to naught, of course, if China's urban workers and rural peasants cannot, or will not, perform. This is not an idle question, and in the past few months, policymakers in Peking have been addressing themselves to it. As noted, the delegation heard discussion of a return to wage incentives, among other inducements. The problems in urban areas are deeper than that, as the experience of the Cultural Revolution illustrates.

INDUSTRIAL WORKERS
Factories were among the hardest hit of China's institutions during the turmoil of the Cultural Revolution. For the same reasons that China's universities and technical training centers were (lisrupte(d by the primacy of ideology over practice, China's factories suffered severe drops in efficiency and production. Experts attribute this to low morale amongst workers as much as to any ideological commitment on the part of the average worker.
Just as the general policy debate has shifted to favor the expert and the pragmatist, so has the factory management policy shifted. While many factory or industry heads rose to power during the Cultural Revolution because of their political purity, rather than any particular industrial expertise they might have possessed, likewise the individual workers were encouraged to join Revolutionary Committees to run the entire factory or industry, regardless of the worker's lack of management or planning experience.
'W '11 hin-zton Post article "China's Oil" by Hobart Rowen, Aug. 11, 1978. Pennzoil officials have been quoted as saying they were asked to draw up offshore exploration plans, with the most likely target being the South China Sea. "9 Article, "China's Tough Oil Bargain," in Far Eastern Economic Review, by James Srodes, Sept. 1, 1978.





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One of the first steps announced in early 1978 was the abolition of the Revolutionary Committees in all aspects of China's professional activities, from factories to universities. But persistent accounts appear of committees in many regions clinging to at least a share of the power.
Wages and wage incentives form another area where China's new realism has produced new, and in this area, considerably revised approaches to spurring production. Even prior to Teng Hsiao-ping's return, China's wage scales left nothing to be desired from the bureauerotic standpoint, resembling in complexity, if not munificence, the Civil Service charts in the United States. 3o

INCENTIVES
Shortly after the delegation returned from China, it was reported that 85 percent of China's factory workers had received small raises of about $3 per month. 3
Among the dilemmas now being faced by Vice Premiers Teng, Yu, and others involved in the modernization effort is how to use wage hikes as production incentives without creating massive inflation. As noted, the delegation was told that China planned to increase pro(uction of consumer goods. Given the relatively low salaries and high cost of those consumer goods normally available which are not necessities such as bicycles, watches, cameras, radios, and those which are rationed, such as food and clothing, experts agree that there is room to absorb pay hikes within the Chinese economy so long as production keeps pace.
Since the government controls all aspects of the economy, an obvious "anti-inflation" device would be to hike prices to keep pace with wages, but the self-defeating nature of that measure would seem obvious in view of the stated goal of the planners to increase production through improved worker's morale.
After being discredited for radicalism d(luring the hey-day of the "Gang of Four," China's "unions" have been directed to reorgamnize aMl aidl in the campaign to improve production. Patterned primarily on the Soviet model, the unions are organized on a factory by factory, rather than industry3-wide basis. While they on occasion can take up individlual worker grievances with "management," they are not expected to engage in industrial action or strikes.
Americans an(I other foreigners who have worked in Chinese factories during and after Cultural Revolution have noted that the work pace is- very slow, the working conditions frequently inadequate by Western st aindrs, and the machinery in ill-repair, and out-dated. One observer coitIented in 1977 "If the workers had been functioning at anything reseibling a reasonable work pace, the factory could probably have (Iou)led its output. But quotas were set so low, apparently so that they (omild be filled without difficulty, and anyone who wanted to ee I things U) risked being criticized by his workmates." 32
I tistical inIformation in this section comes primarily from articles in the Far Eastern 10- .priicipally tIhe issue of Jan. 27. 1978.
W\V -hin 1t,': n P t 'hhui "('hine e I, )lsCioline," by .1ay Mathews,. July 28.1 1978.
FFar Eastern Econonlic Review, Jan. 27, 1978 and the Washington Post article by Jay M h ws of July S, 1978.




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PAY SCALES
Instituted in 1956, modified in 1962 and 1966, and under scrutiny at the present time, the vae scale for ('hina's nonariculturail work force (all are employed(I by the State) has three (list incet cate ories of employees: workers, administ rators, an(d technical personnel. '1Their .,rades and salaries as of October 1977 were as follows:
(1) Workers have eight grales, or steps, ranging from a low of 30 Rimb a month ($18) to a high of 100 Rmb ($60).
(2) Administrators have no less than 25 grades, with a monthly low of 30 Rmb, and a peak of 450 Rmb (c. $270).
(3) Technical personnel have 13 grades, from a low of 45 Rmb (c. $27) to a monthly high of 340 Rmb (c. $204). At the same time, Peking established 11 different wage regions nationwide. Under this system, workers, administrators an(d technical personnel in the same grade would receive slightly different salaries according to where they happened to work. To further differentiate, special bonuses were paid to workers assig~ne(d to remote locations, suchi as Tibet or Sinkiang. Finally, specific occupations were granted slightly higher compensation than others for example, a highly skilled artisan might make 3 Rmb (c. $2.40) more a month than a steelworker in the same grade.
All wages prior to an announcement of a general hike in October, 1977, had been "frozen" at 1962 levels. In October, Vice Premier Yu Chiu-li, Chairman of the State Planning Commission, announced a general wage rise of one grade on the pay scale for 60 percent of China's nonagricultural workers-some 40 million people. Yu said that those affected were primarily on the low end of the wage scale. Experts estimate that if a raise of just 10 Rmb (c. $6) a month is involved for each individual an annual hike of some 4.8 billion Rmb (c. $2.8 billion) would occur for the national money supply.
AGRICULTURAL WORKERS (THE PEASANTS)
Since 80 percent of China's 900 million people still live in the countryside, it is axiomatic that the success of the PRC's modernization programs will hinge on success in agriculture. Peasants, like everyone else in China, work 6 days a week. While their educational and medical opportunities have vastly improved, in terms of their daily life, the peasants perhaps more than any other group in China still live and work much as they have since the earliest times.
The PRC is not self-sufficient in production of food-as noted, repeated drought has forced massive foreign grain puchases-but neither do the PRC's people find themselves subject to unrelieved famine. While food is rationed, the allotments of staples would appear ample by virtually any standard: peasants, intellectuals and cadres receive some 30 pounds and workers 40 pounds per month. 33
It is in the area of "sideline production" of nonstaples, such as meat, fish, eggs, vegetables, sugar and cooking oils where rationing-and underproduction-hits hardest. These are the areas where the peasants' private plots are expected to take up the slack. Private plots, while representing a threat to the traditional Maoist philosophy, are an important factor in peasant morale, since they can eat, or sell what they produce for profit. This contributes to the peasants' willingness to cooperate in the government's modernization plans.
Article in Far Eastern Economic Review, Apr. 14, 1978.





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To date, the administrators in Peking have addressed themselves primarily to the goal of mechanization, and it is not clear that the leadership (despite Premier Hua's expertise in rural administration) has outlined an overall plan in any detail. The obstacles are formidable:
Ninety-six percent of China's population is crowded into only 36 percent of the land; only 10 to 11 percent of the land is cultivated (100 million hectares) and that percentage will decrease as the PRC experiences the "urban sprawl" common to all developing and developed nations. 3
As the delegation was able to observe during several tours of the countryside in several regions, as well as during three daytime flights over vast distances, productive land in China is extensively cultivated. Some 70 percent of the cultivatable land is double-cropped, and in the southern provinces, triple cropped. So an immediate advantage of rapid mechanization would be increasing yield by reducing the time between planting and harvesting, as well as in ploughing, threshing and transplanting.
MECHANIZATION
At present, though, the PRC's level of mechanization is very low; only 10 percent of the farmland is ploughed by tractors. As a result, whereas an American farmer feeds 100 urban dwellers, the labor of 5 Chinese peasants is needed to feed just one urban resident. Only one household in 400 in the PRC even owns a tractor, compared with 80 percent of the agricultural households in Japan, for example.
In January 1978, Vice Premier Yu Chiu-li announced a national goal of 80 percent mechanization of all major agricultural operations by 1980. Since the quality of the PRC's existing agricultural machinery production has been criticized severely by the Chinese themselves, and since the 1980 goal seems optimistic even by the often rhetorical standards set by Peking, the field of agricultural mechanization would appear to be ripe for foreign exports and expertise.
A month before the Delegation's visit to the PRC, a large U.S. agricultural machinery delegation toured China. PRC officials were subsequently quoted as predicting excellent sales prospects, and rapidly concluded contracts. While experts feel that the PRC will follow its traditional pattern of purchasing prototypes to copy in its own factories, one American firm, John Deere, Inc., has made more than $1 million in sales to China in recent months.
Even assuming that mechanization can proceed close to plan, however, success in the rural sector will depend as well on other, major, fa(tors.
For example, the present field pattern is geared to the traditional, nsic, 1in(1iviual effortI by groups, of peasantss working by hand. o1seqilent y, cro)s within VPy different planting anid maturation er iols are grown siIde by side. Iechanization oin a large scale will 1i11an that the very l Ihysical patItern of ('hinese agiriculture will have to be changedL ( I ntire IehI st uet urs will have to be realined so .Joi caII be plhitied for stiltimltaneouis liarvestilng.
E lveni iti he i ecl,1mi:il anul structtiral problems are overcome ne lithe iehIs rained (with the massive social p)roblelis entailed
a Oct. 3, 1978 article in Far Eastern Economic Review by John Carroll.






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in persuading the peasants to risk changing the patterns of 1,00o years), farm mechanization will also binge on other mesuires which have traditionally plagued PRC planners: irrl~ation, see 4 (levelo)ment, rural electrification, capital construction, pest control, a1( tie all-important area of fertilizer development, production, and 'ap)lication.
The PRC is presently the world's largest importer of nit rogenois fertilizers, 70 percent coming from Japan."5 The PRC's traditional and highly organized system of locally produced fertilizer is well
known, but the rate of application of more efficient chemical fertilizCr is still very low-only 68 kilograms per hectare, compared with Japan's rate of 400 kilograms per hectare.
The final area which must be integrated into the PRC's imbitiows agricultural mechanization plan is management of the in Iivi(illla peasants themselves in work teams, production bri ga es, and communes (in that order; the commune falls within the county, the count lty within the province, and the province within the region).

RURAL WAGES

The complex and highly stratified system of paying urban workers, administrators, and technical personnel has been described. The peasantry are compensated for their labor under an entirely different system based on what the Chinese call "work points," but what in economic terms is usually called "piecework," and in earlier times could be compared with "sharecropping." The system has been
described by an expert:
The Government advances maintenances monthly to the peasants and settles the accounts with the peasants at the end of every year. The yearly yield of a production brigade is divided into two parts. One part is "public grain" and belongs to the State. The other part constitutes the total income of the brigade, but it has to be sold to the Government at a price set by the Government. One part of the total income of a brigade is the collective reserve funds of the brigade. Generally speaking, this part is used to buy farm machinery, chemical fertilizers, insecticides, etc., for the brigade, and to support the administrative service and welfare of the brigade. The other part is shared by the peasants of the brigade. The result of dividing the total number of the work-points obtained by the peasants of the brigade into the value of this part of the yield is the value of every work-point. The product of the value of one work-point and the total number of work-points which a peasant obtains a year is the practical income of the peasant. The Government pays the peasants in both grain, which is rationed, and money.
If the result of the settlement at the end of a year is negative, which ay occur in some places where the land is too arid or sometimes when the weather is bad, the peasants are in theory in debt. But in most cases they need not pay back their debt to the Government. In other words, the income of a peasant is decided by two factors: the value of one work-point which is based on the harvest, and the number of his work-points which is decided by his work. Because of this the peasants are quite concerned about the harvest and will work hard to get a bumper harvest, though neither the land nor the yield belong to then. From the viewpoint of the economy a production brigade may be looked upon as a corporation. In this corporation every peasant in the brigade is a director of the board, and his work-points represent his stock. The Government is, in fact, no more than a tax-gatherer, though in theory the boss. So the Chinese leaders can have faith in the morale of the peasants. 3
While the obstacles to success discussed in this section on rural and urban workers are obvious and formidible, the sheer magnitude of the undertaking would appear on balance, to be a positive factor, rather
35 Oct. 6. 1978 article in the Far Eastern Economic Review.
3 Apr. 14, 1978 article by Ma Chu in Far Eastern Economic Review.
35-200-78- 6





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than a negative one. For as mechanization increases, thus freeing hands presently needed just to keep the food supply roughly even with population growth, those rural hands can be organized to construct and work in the massive transportation, irrigation, fertilizer, and production facilities needed to boost further mechanization.
CHINA SINCE THE CULTURAL REVOLUTION
The following section was prepared at the subcommittee's request by Dr. Robert Sutter, Analyst in Far Eastern Affairs, Congressional Research Service, Library of Congress.
INTRODUCTION
The leaders currently governing the People's Republic of China have been strongly influenced by the tumultuous domestic and foreign l)olicy developments China has experienced since the start of the Cultural Revolution in 1966. Many of these leaders rose to high-level l)ositions, while others were demoted, purged and rehabilitated, during this period. All of them have had to grapple with serious domestic problems and complex international pressures which have confronted China over the past decade.
This survey provides an overview of the domestic and foreign policy developments of major importance to Chinese leaders since the start of the Cultural Revolution. It shows that Chinese leaders in recent years have been striving for internal political stability and material progress following the turmoil and ideological excesses of the Cultural Revolution. Their efforts have met with only partial success, as the Chinese today still confront major problems in their drive to unify their party and government apparatus, revitalize and modernize their economy and national defense, and strengthen their educational, research, an(d cultural institutions. Peking's successes in foreign affairs have been more pronounced, as China has emerged from its diplomaticc isolation (luring the Cultural Revolution to pursue a flexible and pragmatic foreign policy which has enhanced PRC intenational contacts and placed China among the major actors in Asian and I world affairs.
DOMESTIC DEVELOPMENTS
(nior ci(e F(mier Tcng Ilsiao-ping and other prcmincnt Chinese leO:liers have repeated( ly stressed (during conversations with Western vitors over the past year that China faces serious problems in its effort s to modernize the economy, education system, and military st r1eiture, to make PR( political and social organizations more effic:iet, and to improve Peking's standing in world affairs. Teng and other leaders have claimed that Pekinr's current difficulties stem in
r le measure from the (disputive policies and actions over the past 8





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as too simple, but they have generally agreed with the view that China has indeed gone through a trying period since thle (-'dtural Revolution and is still suffering from some of the negative aftereffects of that experience. 17
IMPACT OF THE CULTURAL REVOLUTION, 1966-69
During the early years of the Cultural Revolution, Mao Tse-tfi and other Chinese lea(lers organized millions of (-'hinese yoith n111to Red Guard contingents, which they used to isrlt an(l ultimately
(destroy the existing Chinese Communist Party (CCP) and (rovernment administrations. Some Red Guard attacks on party and government bureaucrats led to armed clashes between the youths and establishment forces. Schools were closed for several years to allow the youths to participate in the Red Guard movements. Scientific and cultural activities also were curtailed or halted.
Most rural areas were not directly affected by the disorder, but : iy Chinese cities were seriously disrupted. Normal government act'vi ties came to a halt in some places and production in many urban enterprises declined. Without an effective party or government organization, Chinese leaders were forced to call in the People's Liberation Army (PLA) to maintain law and order and to assure that production would not decline further.
Opinions vary as to why Mao and his allies undertook such an ultimately disruptive reformation of the Chinese party and government. For one thing, Mao reportedly judged that leaders then in power in the party and government were fostering political, social, and economic programs that emphasized hierarchic organizations and material incentives. He judged that these leaders were following a path similar to the one followed by the "revisionist" post-Stalin leaders in the Soviet Union, and he thought that radical steps were needed in order to maintain progress in China toward the Maoist goal of an egalitarian and ideologically motivated society.
At the same time, numerous Chinese leaders reportedly used the opportunity of the Cultural Revolution to advance their careers and to attain higher office at the expense of the thousands of veteran cadre who were purged during this period. Prime examples of these newly rising leaders were 1ao's wife, Chiang Ching, and other leftist leaders who came to be known later as "the gang of four." Many other Chinese leaders who still hold power in Peking-including the present CCP Chairman Hua Kuo-feng-also rose to power in large part because of their ability to advance during the political turmoil of the Cultural Revolution.
PLA forces stationed throughout the Chinese provinces began strong efforts to suppress Red Guard activists and to restore order in 196S. Western analysts have offered differing explanations as to why Chinese leaders, who launched the Red Guard movements 2 years earlier, now were willing to go along with the suppression of the activists and a return to more normal administrative practices. They frequently have stressed that the vast majority of Chinese leaders seemed preoccupied with the host of problems China faced at this time including
3 Some recent Western analyses of Chinese domestic affairs since the Cultural Revolution Include Parris Chang, "Power and Policy in China"; Byung-Joon Ahn, "Chinese Politics and the Cultural Revolution": Jurgen Domes, "China After the Cultural Revolution"; and Maurice Meisner, "Mao's China."





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the need to restore order, rebuild the party and government administrations, promote urban and rural production, revitalize national defense, and reopen schools, universities, and scientific, cultural and research establishments. Peking's success in solving these problems over the next few years was limited, however, in part because of the massive size of China's problems and the limited resources available there, but also because of continuing sharp leadership conflicts.
THE LIN PIAO AFFAIR, 1969-71
As order was slowly restored in Chinese cities, and party and government administration was gradually rebuilt during 1968 and 1969, it became apparent that a group of Chinese military leaders headed by Defense Minister Lin Piao were exerting unusually strong influence in Chinese ruling councils. In particular, military leaders, who were providing local law and order in the Chinese provinces, gradually assumed important positions in the rebuilt party and government organs there. Based on their local power, their traditionally important positions in the Chinese central government in Peking, and the apparent active support they received from some leftist Chinese political leaders like Chiang Ching, PLA officers loyal to Lin Piao attained very strong political positions at the time of the 9th CCP Congress in April 1969.
Their positions were not unchallenged, however. Over the next 2 years, Chinese officials led by Chou En-lai and backed by such veteran military and civilian cadre as Yeh Chien-ying and Li Hsien-nien worked to reduce the military's dominance in Chinese politics. Disputes between the group around Lin and the officials allied with Chou tended to impede progress toward a resolution of China's serious domestic problems. This, for example, the two sides differed on such sensitive issues as:
(a) Rehabilitation of reteran cadre who had been discredited during the Cultural Rerol ution.-Chou generally favored the rehabilitation of these leaders, reportedly in the hope of using their talents to get ('lhina's administration and economy moving again and also to employ their abilities to counter the influence of Lin Piao's group, whereas Lin and his allies reportedly preferred the status quo;
(b) PLA i.ifluence in C(t inese party and government aifairs.-Chou's
group generally favored more separation of the military from civilian )political duties, whereas Lin and his colleagues supporte(l the mainteince of theI PFA's strong position in the party and government;
(c) J;,/tary s8pendng.-('hou's group reportedly favored a cutback in nilit ary spending, hoping to focus China's scarce resources on
eooic levelopment, wherea- s Lill's folowers favored continued high n military sen(ing, both for large armies amnl the acquisition of 11mo10(lern
(i) Ioreln a fi rs.-- C(hou favored a differentiated posture toward Ihe two ser)owers, hoping to use improved( relations with tife United St at es in o)u leT to offset .'rvowing SV soviet. ure on China ; Lin, on the (t her h11,1(1, 1'ivoretl I c(ont inla tion o1' sItron Chinese opposition to [)Ot~ I, o'iprowers.
()vcr f e cext 2 years, ('h1ou and Is allies Inanlage(l to use





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successes they engineered in Chinese foreign policy and in their
programs for revitalizing the Chinese administration and economy to challenge and ultimately to destroy the power of Lin Piao. Lin died, reportedly in a plane crash, in September 1971. Subsequently, the power of PLA leaders in party and( government affairs in China was reduced; military spending was cut hack; and the civilian lea(lershipbolstered by the rehabilitation of such veteran cadre as Teng Jlsiaoping-was able to reassert its traditional dominance of Chinese military affairs. The highlight of this effort came in late 1973, when tie Chinese party completed a transfer of all the major military leaders who had become entrenched in power in particular regions in China during the Cultural Revolution.
REFORMS UNDER CHOU EN-LAI, 1971-74
Following their success against Lin Piao, Chou and his colleagues began programs designed to reduce China's Maoist ideological preoccupations during the Cultural Revolution and to advance Chinese economic development and the material quality of life of the Chinese people. They turned away from the ideological campaigns begun in the Cultural Revolution which has diverted attention from more practical problems of economic development. They attempted to revive the use of certain kinds of material incentives in order to encourage workers to work harder-practices which had been strongly criticized by activists during the Cultural Revolution who judged that Maoist ideological incentives would suffice to motivate workers to work hard. They reopened universities and other institutes of higher leading and research, reduced the amount of time teachers and students spend on ideological studies, and revived standards which emphasized the importance of academic achievement and downp)layed ideological criteria which had been prevalent (luring the Cultural Revolution.
These leaders supported programs which sent youth from the cities to the countryside to work with peasants. Such programs served to decimate the ranks of the increasingly moribund Red Guard organizations and to effectively reduce the likelihood of a repeat of the disruptive events of the late 1960's. At the same time, order and discipline were emphasized in urban factories, and managers were given more disciplinary power over their subordinates-a change from the practice during the Cultural Revolution when workers commonly halted production in order to organize impromptu "struggle"
meetings designed to discredit managers in the eyes of the workers.
Chou's group also tried to revitalize China's economy by purchasing foreign technology-including whole plants-and it attempted to gain foreign exchange to pay for this technology by increasing Chinese exports. This policy was in apparent opposition to the ideological stress on self-reliance voiced by Chinese leaders during the Cultural Revolution. At, the same time, Chou's group tried to broaden Chino's cultural life beyond the few selected "model works" fostered (luring the Cultural Revolution, and it advocated greater cultural interchange with foreign countries, including the "bourgeois" nations of the West. To manage all these changes-and presumably to strengthen their own leadership position-Chou and his supporters advocated a rehabilitation of hundreds of high-level Chinese leaders who had been discredited during the Cultural Revolution.






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CHALLENGES FROM THE "GANG OF FOUR, P 1974-76
Some political leaders, whose careers had benefited from the Cultural Revolution and who had become closely identified with the ideological policies of that time, saw the return to pragmatism and the rehabilitation of veteran cadre as a threat to their leadership positions. These leftists-headed by the four Chinese Politburo Members now know as the "Gang of Four"-resisted the new policies of Chou En-lai's group in several ways. Their influence was felt in particular during massive political campaigns which spread throughout China in 1974 and again in 1976.
The campaign in 1974 focused ostensibly on criticizing the historical policies of Confucius, but in fact it was used by the leftists to attack the current policies of Chou En-lai and his group. Employing their control of some PRC propaganda media, the leftists made repeated allusions which compared Chou's policies with those of Confucius and denounced his programs stressing academic performance in education, material incentives, increased foreign trade and cultural exchanges, more social discipline and order, and the rehabilitation of veteran cadre.
Leftist attacks slowed the revitalization of China's material development, although Chou was able to win national support for his programs and to reassert China's primary goal of becoming a "modern Socialist nation" by the end of the century, during the National People's Congress of January 1975. But Chou's health worsened that year and his death in January 1976 prompted a revival of leftist efforts to curb pragmatic policies. The "Gang of Four" launched a major political campaign which succeeded in bringing down Chou's chief lieutenant, Teng Hsiao-ping, and in seriously complicating plans at that time to streamline and modernize the armed forces, increase foreign trade, promote academic excellence, and rehabilitate veteran cadre.
The death of Mao in September 1976 resulted in an apparently serious weakening of the political power of the "Gang of Four." During the ensuing struggle for power, the "gang" members and some of their followers were toppled from power by a diverse coalition of Chinese leaders, including some veteran military and civilian followers of ('hou En-lai-like Yeh Chien-ying and Li Hsien-nien-and some younger leaders who had risen to power since the Cultural Revolution-like Hiua Kuo-feng.

RECENT DEVELOPMENTS
Over the past 2 years, the PRC leaders have taken several major steps fonvrwar(I in meeting China's developmental needs-they have established the outlines of an economic plan for China's economic development up to 1985, begun efforts to increase capital investment in agriculture, light industry, and heavy intIustry, authorized wae increases For low\ pid workers, hlaunehed reforms in education and research designeIl to improve ('1hina's level of technical competence, restored d(iscil)ine and fixed rules and procedures 11tlhin ( 'hinese party anll government organs and( in major economic enterprises, and begun a program to streamline and modernize Chinese fighting forces.
Most Western observers agree that ('hin's prospects for successful (develolmelt have been enhanced( following the )urges of Lin Piao and








the "Gangr of Four,' but many add that numerous pro)blems, coni ,1le to vex the PRC leadership and to coinJ)Iictite ( hina's sear-ch f'orl. c ritil progress. In-leedl, the CUrrent Chine1Se e ler~~ls Seem1 to remliainl farl from unified over how Chinasho1101)1 pocee(I. Thms, kor exlinple, I er ]s continuing (division andl ant aon-ism1 between Some officlsk who wore criticized (luring the Cultural Revolutio loll a!subsequlenty ei: ili tate(I, andisome whose careers, benefited Ion(oeasca OlwtI i
Cultural Revolution, Lin Pin.o.,id m or the ''Gang_ of Four-.'' Thre is, zilko strong dlisagr-ieement between leaders, who fZavor a ('Od inning em ll-li 1 andl only 1liiite(l resources to spare in the drive for- ma1,terial, prou_.I l--. The PRC lead er's ar lms ei-tairi to have s-triong- d!z(l>agreAineits w\"Ien1
they decide which of China's major competing needs,-uch as cultural mechanization, light indu tst ry, and consumer p~roducnts, >1 'ei production and transportation mod ernization, an1 military- flo(lem izat ion-will receive priority for future development.

FOREIGN RELATIONS
The checkered development of Chinese dlomestic police over the past decade has been mirrored to some~ extent by Pekilng's approach to foreign affairs during the pe-Viod. The general trend in hwforeirm policy has been to move awvay fromn th.,_ isolation a-nd ideol(M,_IliaI self-righteo-usness which charac te rizedl Pekin( ,'s postunre (h rig Ii e Cultural Revolution to a more pragrmatic, conventional tliplonmctic
appoac designed to strengthen andl protect GTinzas vital interests inl Asian andl world affairs. China's progress in foreign affairs has been crreater than its accomplishments in domestic policies, with a pa--rt icularly crucial development bein(_r the Sino-American reconcilia ,tion begun during President Nixon's February 1972 visit to China-the! most important breakthroucrh in modern Chines*e foreig _n lpolicy. Ilo-ever, progress toward pragmatism in f oreign affairs has been periotdically slowed and halted over the past decade by the same kind of leadlership) tisa~rreements andl conflicting interests which have pl agued Chinese domestic affairs. 3I

ISOLATION DURING THE CULTURAL REVOLUTION
In the mid 1960's, Chinese foreign policy was~ marked by aicuteo isolation, stemmingy in larer -part from the negative impact ol* 1he Cultural Revolution on the conduct of Pekin(,'s, foreirin Tolev. Provocative Chinese diplom-1atic behavior, part icul '-try inl 1 967 and 1968, severely weakened Ch6ia's internationally stature -,nd( isolated~ it from many of an already limited number of foreign friends. Towzri, many nekhrborincr states in Asia, for example, Peking adopted zin at titude of self-rizrhteous host ilitv andl (1isdainl, and l tbereby seve-e ly alienatedl several previously friendly states inchii iinfV Ca mbo'Iitt~
Somfe rpeent Western analyses of Chinese foreign policy since the Cultural Revo1'Ttin Include A. Doak Barnett. China and the Major Powers in East Asia; Harold HInton, Th1ree and a Half Powers: The New Balance in Asia: JTohn Gitting-s, The World and China, and Robert Sutter, China-Watch: Toward Sino-American Reconciliation.





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Nepal, Ceylon, and Burma. Even Peking's Communist neighbors, North Korea and North Vietnam, were cool toward the PRC, while continued intense Chinese hostility toward both the United States and the Soviet Union insured a persisting freeze in PRC relations with the two superpowers. Prospects for an improvement in Chinese foreign relations at this time appeared limited, inasmuch as Chinese leaders showed little interest in foreign developments or even in the restaffing of the Chinese foreign ministry apparatus which had been decimated by Red Guard attacks during the Cultural Revolution.

ORIGINS OF A NEW APPROACH TO FOREIGN AFFAIRS
The August 1968 Soviet incursion into Czechoslovakia and Moscow's concurrent formulation of the so-called Brezhnev doctrine of limited sovereignty demonstrated to the Chinese that Moscow might be prepared to use its overwhelming military superiority in order to pressure, and even to invade, the PRC. The Sino-Soviet border clashes of 1969 increased Peking's concern over the Soviet threat. In response, Chou En-lai and his supporters made a major effort in 1969 to broaden Peking's leverage against the Soviet Union by ending China's international isolation. In this pursuit they utilized conventional diplomacy and softpedaled the ideological shrillness characteristic of Chinese forpiign policy during the Cultural Revolution.
Because of Moscow's massive power, Peking realized that improving di)lomnatic relations with most countries would be of relatively minor significance in helping China with its pressing need to offset the U.S.S.R. In East Asia, only the other superpower, the United States, seemed to have sufficient strength to serve as an effective deterrent to Soviet pressure. Moscow in the past had shown uneasiness over signs of possible reconciliation between China and the United States. Thus, the Chinese leaders were aware that they held an important option: They could move closer to the United States in order to re(adjust Sino-Soviet relations and form a new balance of power in East, Asia favorable tb6 Chinese interests.
While the Chinese faced increasingly heavy Soviet pressure in 1969, the newly installed Nixon administration was beginning policy iniiatives designed( to pull back American military forces from Asia ,nd to reduce U.S. commitments along the periphery of China. It was soonti aIpparent that the so-called Nixon doctrine of gradual troop wih(Ilwal was perceived( favorably by Peking. The Chinese leaders sw thlie American pullback as solid evidence of the Nixon admininistertion's avowed interest in improved relations with China. They also viewed it as a major opportunity for China to free itself from the brirolensome task of maintaining an extensive defense network along ('hina's southern and( eastern borders aZgainst possible U.S.-hacked iiie(I incursions. Peking now saw greater opportunity for C(hina to s)l(eId its own inilluence in neighboring East Asia as the United(l Sttes ,rad iually ret reted. Primarily on the basis of these two facItoIs- needI to use Sino-Americnn rapproacheiment to offset Soviet (Me'sure on ('h n and a desire to take advantage of prospects opening for the PR( under t eins o thlie Nixon doctrinee in Asia- Peking nrz'e" to receive President Nixon and to begin the process of norI i~liz~iIg Sitio-Aieii.in r'elat ions.





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LEADERSHIP DIFFERENCES OVER FOREIGN POLICY
The logic of this new pragmatic approach-which was to provide thIe foundation of Chinese foreign policy in the 1970's-was not univei Ily accepted by Chinese leaders. Lin Piao and some of his military alies reportedly resisted Chou En-lai's initiatives in foreign affairs, in ,1rt because the successful implementation of Chou's progra in would rilise the political stature of Chou and his supporters at the expense of Liin and his group, and would also reduce the need for large-scale military spending as the primary means to guarantee China's security. Lin's group was joined for a time by leftist political leaders such as Chianz Ching, who favored a stringent ideological posture in foreign affairs and opposed in particular Peking's new flexibility toward its fon'er main adversary, "U.S. imperialism."
The effectiveness of Chou's program in offsetting the Soviet threat to China and in broadening Chinese international appeal served to neutralize much of the opposition within the Chinese leadership. By the early 1970's, Peking had rapidly expanded diplomatic contacts and improved relations with many nations. The Chinese advance was highlighted by Peking's entrance into the United Nations in October 1971, President Nixon's visit to China in February 1972, and the normalization of Sino-Japanese relations during Prime Minister Tanaka's trip to China in September 1972.
Lin Piao and his allies were removed in late 1971, but the leftist Chinese politicians headed by the "Gang of Four" occasionally rose to resist and reverse pragmatic programs in foreign affairs in general and in Sino-Ame'rican relations in particular. Most notably, as part of their attack on Chou's policies during the anti-Confucius campaign in 1974, the leftists harshly criticize(d-on ideological grounds-the allegedly corrupting influence on Chinese society of foreign Music, films, and other cultural works. This served to curb what had been an active Chinese interest in developing cultural exchange with foreign countries, including the United States. They criticized Chinese trade with capitalist countries, with propaganda claiming that such trade would break the Maoist precept on Chinese economic self-reliance and would make China dependent on "imnperialism"-a line which acted to dampen Peking's interest in increasing trade with the West.
The anti-Confucius campaign also led to an intensification of SinoSoviet hostility. Not only did Peking media greatly expand harsh ideological polemics against the Soviet Union, but the Chinese-for the first time since the Sino-Soviet border clashes of 1969-publicized the arrests of alleged Soviet "spies" in the PRC. Peking gave extensive publicity to the arrest in January 1974 of Soviet diplomats in the Chinese capital and the arrest in March of that year of a Soviet helicopter crew which had landed in Sinkiang near the Sino-Soviet border. The diplomats were promptly expelled from China, leading to a quick close to that incident. But Peking decided to detain the Soviet helicopter and its crew, resulting in an exchange of sharply worded Sino-Soviet protests which marked a downturn in the already poor Sino-Soviet relationship.
Chinese relations with the United States fell prey to the antiConfucius campaign in various ways. Peking was obviously less interested in cultural exchange and trade with the United States. Polemical





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Chinese media criticism of U.S. "oppression" at home and "imperialism" abroad also increased sharply. Peking at the same time adopted an unusually strong, militant stand on the sensitive Taiwan issue, going so far as to warn in shrill language that China was prepared to launch a military strike across the Taiwan Straits.
RECENT CONCERNS
A similar ideological hardening in Chinese foreign policy took place when the leftists briefly gained power in Peking in mid 1976, but since the removal of the "Gang of Four" late that year, Chinese officials have been preoccupied largely with pragmatic efforts to protect China's security interests in world affairs, especially against perceived threats from the Soviet Union. Peking has worked to offset suspected Soviet "expansion" in Asian and world affairs by fostering an "antihegemony united front" led by China and other developing Third World countries and including developed Western countries-even the United States, whose interests are directly threatened by Soviet "hesemonism."
As was discussed in detail in a previous section of this report, Chinese lea(lders have shown special concern in recent years over U.S. ability and willingness to work with China in offsetting what Peking sees as Moscow's ~rowing ambition for world domination. Peking has noted that the United States has tended to "appease" rather than resist the U.S.S.R. over such sensitive issues as SALT, disarmament in Europe, East-West trade, and Soviet policy in Africa.
A perceived decline in U.S. strength, coupled with a growth in Soviet power, has also intensified longstanding Chinese fears of Soviet efforts to "encircle" China in Asia. Most recently, PRC leaders, especially Vice Premier Teng Hsiao-Ping, have claimed to see Moscow heavily involved in Vietnam's alleged efforts to dominate Indochina, anId ti ey have accused the Soviets of having established military bases in VietnIam for the purpose of "encircling" China and of controlling sea lanes important to the United States, Japan, and China.
Other difficulties in current Chinese foreign policy focus on conflictine goals in China's foreign plans and Peking's limited military and economic power. Thus, for example, Peking on the one hand stresses Ithat it wants the United States to remain strong against. the Soviet Uion in East Asia, and yet on the other hand it continues to vocally s l)pport North Korea's demands for a complete American military wil l ladmwl from the strate_lc Korean Peninsula. China exerts great efforts to reassure its non-Communist neighbors, who have long been suspicious of Chinese intentions, but it also continues to support Moist part ies which ld(l armed insurrections against some of those eo, erunments, sul)pports the rights of Overseas Chinese in these areas, Sli rCssertsi territorial claims which infringe on the holdings of some cif hih le nutions--policies which early upset the non-Communist Asian s tes. Ch ia's current program for militaNry mod(lerniization also eems likely to alarm neighboring Asian states, who fear a major ,xwinsion in Peking's heretofore limited ability to reach militarily ha(evoni it s bo(lers.
In Africa and the lMi(dle East, China's problems have focused on its inability to match massive Soviet shipments of military and other





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compensatino- them for reductions in Oicir trade witli -N1'oscwA-.
















APPENDIX A


CIINA.A ITINERARY

July 3, 1978-Shanghai
06:40 a.m.: Arrival at Shanghai International Airport. Met by Mr. Li Chu-wen,
Deputy Director, Foreign Affairs Bureau, Shanghai Municipal
Revolutionary Committee.
20:00 p.m.: Banquet hosted by Deputy Director Li, accompanied by staff of
Foreign Affairs Bureau.
July 4, 1978-Shanghai
Visit to Shanghai General Petrochemical Complex, in subtiiri)n
Chin Shan, on Hangchow Bay. Host: Kung Chao-juan, director.
Visits to: Kindergarten, No. 1 acrylic plant, workers housing
area, hospital.

July 5, 1978-Shanghai
08:30 a.m.: Visits to the Yu Gardens. Host: Shih Chuang, leading member,
Revolutionary Committee of the Gardens.
14:30 p.m.: Shahghai Dance Institute. Host: Sun Kun, president.
-Dance exercises.
-Scene from the play, "The Dying Tree Comes to Life." 19:00 p.m.: Performance of Shanghai Philharmonic Orchestra.
July 6, 1978-Shanghai to Peking
08:30 a.m.: A. Visit to "July 1" Commune, suburb of Shanghai. Host: Ms. Rui,
Director of General Affairs.
B. Visit to Shanghai Arts and Handicrafts Research Institute. Host:
Wang Tzu-kan.
13:20p.m.: Departure for Peking-Civil Aviation Authority of China (CAAC). 16:00 p.m.: Visit to Pei Hai Park.

July 7, 1978-Peking
09:00 a.m.: Meeting with Mr. Wang Jun-sheng, Vice Minister of Foreign Trade. 14:00 p.m.: Visit to the Forbidden City (Palace Museum). 16:00 p.m.: Meeting with Ambassador Hao Teh-ching, President of the People's
Institute of Foreign Affairs.
19:00 p.m.: Banquet hosted by Ambassador Hao and staff, including Chu Chichen, Deputy Director of American and Oceanic Affairs.

July 8, 1978-Peking
07:30 a.m.: Breakfast briefing at U.S. Liaison Office, Ambassador's residence.
Ambassador and Mrs. Woodcock and staff: Bill Thomas, Economic Counselor, Stapleton Roy, DCM, and Richard Bock, Counselor. 09:30 a.m.: Meeting with Dr. Chiu Pei-yuan, vice president of the Academy of
Sciences, current president of Peking University, acting president
of Science and Technology Association.
11:00 a.m.: Visit to underground shelter. Host: Mr. Kao, Chairman of the Air
Defense Works of Tah Sha Lan St.
14:00 p.m.: Visit to Peking University. Host Dr. Chang Lung-hsiang, professor
of biochemistry.
19:00 p.m.: Cultural performance, Nationalities Palace of Culture.
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86

July 9, 1978-Peking
08:15 a.m.: Visit to Memorial Hall of Chairman Mao, Tienamin Square. 10:00 a.m.: Meeting with Senior Vice Premier Teng Hsiao-ping (Great Hall of
the People).
-Ambassador Hao Teh-ching.
-Mr. Wang Hai-jung, Vice Minister, Foreign Affairs.
-Mr. Hsieh Li.
-Mr. Chu Chi-chen.
-Mr. Fan Kuo-hsiang, Deputy Division Chief. 13:00 p.m.: Visit to Great Wall. 19:00 p.m.: Delegation banquet for Chinese hosts. Guests include: Ambassador
and Mrs. Woodcock, Ambassador Hao Teh- ching and staff.

July 10, 1978-Peking to Sian
13:10 p.m.: Departure for Sian via CAAC flight. 17:00 p.m.: Visit to Wild Goose Pagoda (Ming dynasty). 19:00 p.m.: Banquest. Host: Mr. Chang-tse, vice chairman, Revolutionary
Committee, Shensi Province, Mr. Lu Mlai, Director, Foreign Affairs
Bureau, and Mr. An Wei, Foreign Affairs Bureau.

July 11, 1978-Sian
08:30 a.m.: Visit to Chiao Tung University (Communications). Host: Mr. Chuang
Li-ting, vice president of the university. 15:00 p.m.: Visit temple baths and archeological site.

July 12, 1978-Sian to Canton
08:30 a.m.: Depart for airport, CAAC. 09:00 a.min.: Fliglu to Canton (1 stop)-lunch at Chairman Mao's birthplace. 14:30 p.m.: Arrive Canton. 16:00 p.m.: Tour of Canton waterfront and financial dlistriet. 19:00 p.m.: Wel-oming banquet. Host: Mr. Chu Shao-tien, Vice Chairman for
Foreign Affairs, Canton Province.

July 13, 1978-Canton to Hong Kong
08:30 a.m.: Train to Hong Kong border. 11:00 a.m.: Cros.s Hong Kong hiorder, Sum Chun Railroad Station. Met by:
Consul Genera! Sh(lesmith and staff. 12:07 p.m.: Arrive Hong Kong, Kowloon Station.

July 14, 1978-Hong Kong
08:30 a.m.: Debriefing at U.S. consulate by Consul General Shoesmith, D.C.G.
Burton Levin and staff.
13:00 p.m.: Working luncheon at Government House. Host: Acting Governor
Sir Denys Roberts.

July 15, 1978-Hong Kong to Washington, D.C.
08:30 a.m.: Breakfast with U.S. Chamb er of Commerce, Hong Kong. Host:
Mr. Michacl Eminons, president (in abW ntia). 10:30 ni.m.: Press onft rence. 12:00 n.: LI'ave hotel foir Kai-Tak Airport.
1 :00 p.m. : heels up for Washington And(rews Air Force Base. 21:30 p.im.: Arrival at Andrews Air Force Base.














APPENDIX B



DELEGATION PRESS CONFERENCE IN HONG KONG

July 15, 1978
Mr. PHILLIPS [Consul General's staff] Ladies and gentlemen, Welcome. I apologise for cramming you in such at small room but, unfortunatecly, itsI h!o ou v one we could get. It's my pleasure this morning to introduce to you the Cnu General, Mr. Thomas Shoesmith.
Mr. SHOESMITH [U.S. Consul General] I'm sure that the Honorable Le-1t er Wolff needs no introduction to you all. He is a very familiar' figure in this pr of the world-both as a businessman and as a, member of our oge-mn most particularly as Chairman of the Asian and Pacific Affairs Sbointe of the House Committee on International Relations. In that capacity he and the, other members of his Committee are playing an increasingl y important role iii the formulation of our foreign policy, most particularly in respect to Asia. Congressman Lester W~olff is also, as you know, the Chairman of the HouseSe t Committee on Narcotics Abuse an~d Control. It's a pleasure for me to introduce to you Congressman Lester Wolff, Mr. Chairman.
Congressman WOLFF. Thank you very much, Mr. Shoesmnith. I should like to first introduce the members of this mission-on my extreme right, Mr. Latrry Winn of Kansas; seated next to him. is Congressman Eligio de la Garza ofTez; seated over on the extreme left is Mr. Tennyson Guyer of Ohio; andl seated nx to him, Mr. James Mann of South Carolina and next to him, Mr. Charles- Rangel of New York.
With the exception of Mr. MVann, all of us were on the recent mission to the People's Republic of China. We've just returned from 10 days in the Pi{C. The mission was most fascinating and we hope helpful in furthering mutual understanding on both sides.
Mr. Fountain, who will be with us shortly, was also a member of this group as well as Mr. Burke. Mr. Fountain of North Carolina and Mr. Burke of Florida.
All of the members of this group are members of the International Relations Committee, except Mr. Rangel, who is a member of the W~ays and Meanms Committee.
You know-certainly no visit of 10 days or 11 days qualifies any group as experts on the policies or events of another nation. Although our mission included two members-Mr. Burke and myself-who first visited China two years ago, which gave us an opportunity for comparison. I think we are all united in our determination not to come out of China issuing any earth-shaking pronouncements.
However, I think we are equally united on a general sense of what our mission perceived to be certain trends in China which will bear close study in the weeks and months to come.
I refer specifically to what we feel can be called a sense of a "new realism" in China-on the part of her people and on the part of their leadership-concerning both domestic and foreign policy questions facing China at the present time.
While we discussed many issues with the Chinese, one area where we sensed a potentially important example of the new realismn would appear to be on the question of Taiwan.
Let me state here very clearly that we do not feel that the basic Chinese position on Taiwan has altered regarding their perception of the need for U.S. adherence to the Shanghai Communique and the Three Points. Rather, our delegation sensed a new realism in terms of an emerging Chinese emphasis on seeking ways to settle the Taiwan question on a bilateral basis, between the Chinese themselves, in ways that are acceptable to the parties involved.
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88

In this regard, the delegation sensed a growing Chinese willingness to discuss Taiwan's future with the Kuomintang on the basis of existing realities.
In our discussions on this issue, the historical fact was raised that twice in the past the Chinese Communist Party and the Kuomintang have come together and cooperated when it was in their common interest-first, during the time of Dr. Sun Yat Sen and the Northern Expedition, and again, toward liberation during W rld War II.
When coupled with the repeated instances of our delegation being told that the Chinese recognize what were termed the realities of the United States' involveneit with Taiwan, our delegation emerged from the People's Republic with a definite sense of the sobering effects of the real, very real strategic and political problems facing China in the form of the Soviet Union, which they term the "Polar T-ar", and what the Chinese as well call the Soviet Union's "Asian Cuba"Our general perception of China's "new reality" was reinforced by our visits to educational facilities, cultural institutions and factories alike. At institutions ranging from Peking University to a provincial technical university in Shensi Province, we heard the same themes-that the damage done during the stagnation of the cultural revolution, and solidified by the extremes of the "Gang of Four" have set China back years in scientific and technical education and research, and seriously retarded industrial production, modernization and growth.
Again and again, we heard the Chinese rightfully discuss their strengths, but frankly discuss their weaknesses, and indicate their desire for constructive suggestions from the West, particularly from the United States.
Again and again, we saw evidence that the new realism is leading the Chinese to be receptive to American technology and American expertise to help them overcome the lost decade of the cultural revolution and the so-called "Gang of Four."
This emerging realism is the most striking contrast between China today and that of two years ago, and is, we feel, a most favorable impulse toward normaliz.ition of relations between our two governments. While the Chinese remain determined to pursue self-reliance, they appear to be no longer adverse to making use of the best from other nations-a policy rooted in the Chinese tradition and which continued through the 1950's prior to the Sino-Soviet split.
In this respect, it is the delegation's opinion that the Chinese see their relationship with the United States as part of an overall strategic and political recognition of the realities, which they see as an increasing pattern of Soviet activity around the globe-from Angola to South Yemen, from Afghanistan to Ethiopia and Vietnam. This conflict with the Soviets is seen not as just part of an ideological battle with the Soviet Union but is perceived as an effort by the U.S.S.R. to dominate the entire world.
Hence, the Chinese see an improved relationship with the United States as being in the common interest of both countries.
Our delegation sensed that the Chinese do not desire the United States to play the normalization issue as just another "card" against the Soviets. Indeed, the Chinese seemed to be going out of their way to stress the common strategic and foreign policy interests that we share in confronting Soviet actions in the entire world arena.
What we are calling a new sense of "realpolitik" was particularly present during our di-cussions on U.S. relations with the Soviet Union, and we saw very little of the old rhetoric, despite what was basically a continued and very hard line concerning the Soviets.
A final comment in this regard: the Chinese continually warned us not to fall for what they termed a Soviet "bluff" on possible Sino-Soviet reconciliation, so seriously do they view the practical political and strategic long-term threat posed by the Soviets.
This apparent decline in ideological emphasis is, as I have noted, reflected in Chinese domestic matters as well. Not only did we sense a very real revulsion alzaint the practices of the so-called "Gang of Four", which climaxed a decade of an ideological blanket which threatened to smother China; I think we also perceived a growing appreciation of the linkage between helping to maintain internatIioinal peace, and the time China needs to grow internally.
No longer did we hear that war between the United States and the Soviet Union is, and here I quote, "imminent" and "inevitable" as was the constant theme ~ome two years ago when I visited last. But this time we heard that if the Unite< States maintains strong political and strategic posture in Asia, and Europe





89

and Africa as well, war is actually postp1onable", perhaps for as much, they hope ,

While this may well fall into the good news/lbadl i(ncws categor ',v the delegation Sensed that there, too, a sense of realism regar-ding China's itrtsand needs for'the years ahead is beginning to emerge.
With this growing pragmatism, the delegation sentsed that while Chairmian Mao is still the dominant figure, he is being studied anew-if not beingreitpreted-for support for the new p)ragmnatism. As 1 have indicated, ouri mission heard very little of the rhetoric which so pervaded. the viJsit 2 y-ears ago.
This time the only saying of Chairman Mao which was constantly repeated was Mao's injunction of "Let 100 flowers bloom, let 100 schools of thought contend." W~e were repeatedly told that this new rallying call is designed to permit constructive conflict of thought and ideas in order t o stimulate the progr Iess which the Chinese now frankly admit they must make.
Our delegation feels that the implications of this theme for what we are calling China's "new realism" should-if allowed to flourish-affect all aspects of China's life and policy, and substitute a return to a discipline practised before the cultur-al revolution for the anarchy of the Red Guards of recent years.
So to conclude this brief summary of our impressions, I would say that it is our sense that a flourishing growth-under this strict control of the party, of course-is precisely what the leaders of China hope for their people as this huge and great nation moves to take its place in the world.
While in China, our delegation met with many officials, including Vice Premier Teng Hsiao-p'ing; Vice Foreign Minister. Wang Hai-jung; Mr. Wang Jun-sheng, Vice Minister of Foreign Trade; Ambassador Hao Teh-ch'ing, President of the Chinese People's Institute of Foreign Affairs; Dr. Chou P'ei-yuan, Vice Presi(lent of the Academy of Science and President of Peking University; and many other individuals and provincial authorities who gave graciously of their hospitality, time and views.
Thank you, gentlemen. And now we should like to invite questions-we don't claim to be China experts, we claim to be China students.
QUESTION. Mr. Congressman, you said that China is willing to negotiate anew with the KMT-have you got any substantial information on this?
Mr. WOLFF. The statement that we made was that China has twice before come together with the KMT and there is no reason to believe-they indicated-that they could not come together once again.
QUESTION. Mr. Congressman, did the Chinese raise-bring up-this history of their previous cooperation with the KMT or did you bring it up in your discussions?
Mr. WOLFF. They were the ones that introduced it.
QUESTION. Mr. Congressman, did they say they were willing to talk to the KMT?
Mr. WOLFF. The only point that was made was that-the statement that I've made betore-that they have had a previous history and they see no reason why this previous history could not be repeated.
QUESTION. Mr. Congressman, which official made that statement?
Mr. WOLFF. I would prefer not to identify the official, but to say that it is a very high ranking official at the People's Republic of China.
QUESTION. Have you got any indication that there's going to be negotiations between the two parties?
Mr. WOLFF. I have no indications of that at all. I will have to stand on the statement that I've just made-I do not want to draw any implications from that.
QUESTION. Mr. Congressman, you said that your delegation sensed the growing willingness to discuss Taiwan's future with the KMT-is it just the fact that they mentioned that they had spoken with the KMT twice before or was there anything else that led to this reasoning?
Mr. WOLFF. This was brought up several times during our discussions.
QUESTION. They actually said that they are willing in the future to discuss the matter with the KMT?
Mr. DE LA GARZA. I asked the question of one of the officials-why do you not-the brothers on the Mainland and the brothers on the island of Taiwansettle the difference without involving us, the United States.? Why don't you settle-if you say that this is an internal matter, why don't you handle that and separate it from your normalization of relationship with us? His statement wasamong other things-twice before we have worked together, we have been adversaries-haven't worked at times-but twice before we have worked together; there is no official communication and there has been no official communication
3 5-200-78-7







with Taiwan, but you cannot rule out a third time. That was the statement.
QUESTION. Would you like to see the United States Government encourage Taiwan and its officials to carry out this discussion?
Mr. DE LA GARZA. I accept the fact that this is an internal matter for them to decide.
QUESTION. So the United States Government encourages Taiwan to participate?
Mr. DE LA GARZA. I accept the fact that it's up to Taiwan and the Mainland to decide whether they want to discuss or not.
QUESTION. Mr. Congressman, last year you had the idea of a possible referendum for residents on Taiwan-did you have this idea--or did the Chinese raise this idea with you or did you raise it with them?
Mr. WOLFF. We did not raise it, but it has been the policy-the United States policy-for a number of years for the people who are residents of a particular area to make their own determination; we certainly do not want to interfere in the internal affairs of another nation.
QUESTION. Have you any reaction of the PRC in Washington to that idea?
Mr. WOLFF. No. I have not.
QUESTION. Mr. Congressman, you said that it is a matter of possible negotiations with Taiwan-Mr. de la Garza has just mentioned one instance-what was the other instance-what was the nature of the other instance?
Mr. WOLFF. It was volunteered by the people we spoke to at several points in our discussions that this was-once in response to a question if I recall it, a question as raised by Mr. de la Garza, but the other times it was raised voluntarily and independently.
QUESTION. In the same form that you've talked to them before that they might be able to talk to them again?
Mr. WOLFF. Yes, I would say so-not only talk to them beforeQUESTION. In a single conversation or once in several conversations?
Mr. WOLFF. It was raised several times in a single conversation.
QUESTION. They never said anything that, well, we've talked to them before but clearly "those murderers on Taiwan," or something like that, to start in a position to talk to usMr. WOLFF. Not-to the contrary it was, as I indicated before, there was none of the rhetoric that we heard before about the "murderers" and what-have-you. In fact, it was mentioned that at the time they got together during the Japanese occupation there had been a great amount of killing by the KMT, however, thesome of the people of the KMT went to school with some of the leaders of China, so the KMT was mentioned in a much more conciliatory frame. I would say that they were harder on the Gang of Four" than they were on the people of Taiwan.
That's right.
QUESTION. Did they actually express any willingness to conduct such talks with the KMT?
Mr. WOLFF. I'm sorry.
QUESTION. Did they actually express any willingness to conduct such talks?
Mr. WVOLFF. I don't think we can go further than to repeat what has been said on this in the fact that it was they who raised the point-we did not raise this point with them; and regardless of how the question is framed, I can only give you the answers they gave to us and that have already been indicated by several of the members here.
QUESTION. Mr. Chairman, what have you to say to the contention-we're out of the way-with the three conditions that their job would be much easier for then to handle?
Mr. WVOLFF. I must indicate that there was a very strong admonition and a veryV strong statement that was made that does not rule out by any means the ultimate u1se, if necessary, of force to reunite the Mainland and Taiwan. They would not rule that out as an alternative.
Qui,_-TioN. Did the question of U.S. arms sales to Taiwan come up? And in whlat way?
Mlr. XX OTAFF. It dlid come utp and there was a statement made that if U.S. planes we're Sold to Taiwan it would interfere with the negotiated settlement of the TaiWaLn ie
QUEIrON. They are talking, about sales of U.S. planes to Taiwan now or after norrn:Llization?
Mlr. XWoii'p% Well, if they (10 not want it now, they surely would not want it later on. But the fact still remains that they (lid make a point of the question of the plane sales that are talked about. They did iiot mention. third party planes sales
-it all, however.






91

QUESTION. Did you people talk about Vietnam at all?
Mr. WOLFF. Yes, we did talk about the question of Vietnam. Does anyone here want to address themselves to that? None of my colleagues will-I NN-ill try to. They call Vietnam the "Asian Cuba". And indicated that Vietnam was strongly controlled by the Soviets and that the Soviets were using Vietnam defense facilitie.;.
QUESTION. Some of the local press here in Hong Kong sugge ted Vint If the Soviets made missile bases in Vietnam, did the ChinesQ indicate to you whether the Soviet military presence there was a threat?
Mr. WOLFF. They did not-the only thing they did indicate to us was that the Soviets were making use of defense facilities in Vietnam-they did not elaborate, however. Excuse me, I think the gentleman over there had a question.
QUESTION. How would you characterize the mood over Vietnam?
Mr. WOLFF. Their mood over Vietnam? I think certainly not one of fear, but one of great concern. In fact, it was in response to part of the discussions on Vietnam itself, a statement was made that so far as Vietnam is concerned, as part of a Soviet encirclement plan, that the PRC-the People's Republic of China-Nvn ', has been encircled many times, but they have always broken through the encirclement.
QUESTION. Some American diplomats have suggested the falling out between China and Vietnam provides the U.S. with the golden opportunity to go ahead and normalize relations with Vietnam. Did you sound out the Chinese how they feel if they suddenly made up with Hanoi?
Mr. WOLFF. We did not specifically ask that question because as we don't want to interfere in their relations, we don't want them to interfere in our relations. But I think that from the tone that was evidenced by their concern over Vietnam, which they indicated was trying to creep into ASEAN and undermine ASEAN, that it would at present time have an impact upon our relations with them.
Tenny, do you want to take that question?
Mr. GUYER. I think that in our conversations with various people even as late as this morning before I came to breakfast, that they're very near to normalization with us and they very dearly want to narrow that gap, but It's a matter of stalemate over the missing persons situation that really holds them back; and I think it's almost like a change of prisoners if each would start to cross the bridge. It might be accomplished, but there has to be evidence of goodwill or this will never happen. I don't think that the United States Congress is going to approve stopping the embargo until they make some other gestures to finalize and give a full and accurate accounting of those who are still missing, which is now less than 500. I think the last figure I saw was 487-we still have as prisoners of war or missing in action, and then there are 1,300 known dead but not recovered. Some gesture of finalization in that area would bring normalization very close.
QUESTION. Congressman Guyer, could you give us a sense of whether normalization in Vietnam might jeopardize normalization with China?
Mr. GUYER. No, I don't think that that kind of conclusion should be drawn because just as Mr. Wolff said they are very adamant about us staying out of their other relationships and they do not pretend they're into ours.
QUESTION. Congressman, did you get any sense what their attitude is at the moment for us leaving a trade office, an official trade office in Taiwan after normalization or else putting out a unilateral statement about the need of maintaining peace in the Taiwan straits?
Mr. WOLFF. Not as such except that with a peaceful transition that the United States could, if we just look at the Japanese situation as an example, that the United States could maintain its normal non-governmental relationships with Taiwan.
QUESTION. Congressman, could you give an estimate or appraisal of the relative degrees of Chinese concern with Vietnam, with regard to the Soviet Union, and in regard to the problem of Vietnam/ Chinese, with regard to Cambodia-sort of evaluate the relative degrees?
Mr. WOLFF. I think there is very serious concern over what is happening in Vietnam and the Vietnam/ Cambodian situation. But I think that the-both they and the world are somewhat overreacting to the Vietnam/ Cambodian conflict because it is not anything that's new. This has gone on for centuries. A conflict between Vietnam and Cambodia. The rivalries and the intense difficulties that have existed, have existed now for centuries and the rage back and forth there has always gone on. We in the Congress are very concerned with what's happening in Cambodia, the fratricide if you want to call it that, that has taken place, the mass killings that have taken place there and Congress has expressed great concern for the welfare of the people of Cambodia.





92

The Chinese-I do not think-feel the situation in Cambodia versus Vietnam is as critical to them as the Soviet intrusion into Vietnam, which gives the Soviets a base of operations, as they put it, for further activity in that area, and for the Soviets to be able to maintain a position of being able to interfere with trade through possible naval bases, and supply of energy to Japan as well. They voiced serious concern over the pattern that is emerging of Soviet moves in various places where coups have occurred and regimes that are favorable to the Soviet Union have been set up.
QUESTION. Congressman, did you ask them if they are really serious about evacuating Chinese from Vietnam and if so, how many people they estimate they might take out of Vietnam?
MR. WOLFF. This question was not discussed.
QUESTION. Mr. Wolff, did they betray any concern such as has been voiced by the Left Wing Chinese press in Hong Kong, that Taiwan might in some future situation seek an understanding with the Soviet Union?
MR. WOLFF. They indicated a contrary position. They indicated when one of our members raised the question as to whether or not an accommodation or actually a take-over or some sort of basing of Soviet facilities on Taiwan, they said they are anti-Communist as well on Taiwan, therefore they could not see the accommodation being reached by the Taiwan Government and the Soviets.
One final question.
QUESTION. Congressman, did you discuss with official Americans in Taiwan or here or Peking what you have been told what the Chinese have raised about their past history of cooperation with Taiwan? And how significant did they take what you have been told?
MR. WOLFF. First of all I can say that we did give them the same type of report that we are giving to you. We gave them the report first however, instead of coming to the press first, and I cannot speak for our China watchers except to say that they were interested in what we found out.
QUESTION. Thank you, Mr. Chairman.