For Under-Secretary

This was one of the most interesting parts of the discussion, mainly because of Mr. Herter's frank and perceptive report of his personal impressions. En route to the Far East, he said that he had been briefed by the USA military authorities in Hawaii, who were particularly concerned at the possibility of a deterioration in the position, particularly in Korea and in Formosa. Despite large military forces in being in these two important areas, there were other factors at work which could adversely affect the internal situation in each, and the military appreciation had pointed to the difficulties in the way of holding the position indefinitely.

2. As a result of his recent and direct experience, Mr. Herter said he now shared this concern about the position in Formosa and in Korea. He made it clear that in so doing he based his views not only on American military appreciations on the spot, but also on the general intelligence available about conditions in these areas through UK sources in Hong Kong.

3. In Formosa, although army morale was still good, and the forces (including the air forces) well equipped, Chiang was getting no younger and his position was not strong among the offshore Chinese. The low wage rates in the army (a common soldier received 75 cents a month) and the civil service opened up possibilities of corruption and graft, of which some were no doubt taking full advantage. The country was held together by a sense of mission based upon the hope of an eventual return to the mainland, and the maintenance of a "Free China." Since this, however, was a distant hope, the situation, so far as morale is concerned was precarious. In the minds of the nationalist Chinese the offshore islands were completely identified with Formosa. Their loss would be a great blow to the Formosan régime and to the morale of its army, probably leading to the loss of Formosa itself to the Communists.

4. (A military briefing which preceded Mr. Herter's report had outlined Communist China's military progress over the past few years, including the building up of a jet air force and a small navy. In particular, Chinese Communist military strength had improved in the Taiwan Straits area where they had constructed seven airfields and a railway to Amoy. Their ability to launch attacks against the offshore had thus been greatly improved. In view of the above, the USA side indicated that the offshore island situation was still in their opinion potentially dangerous and should be carefully watched.)

5. In Korea, Mr. Herter said the South Koreans were closer to the enemy. Even here, however, the weakening position of the ageing Syngman Rhee and the uncertain calibre of his political opponents made it difficult to be other than pessimistic about the future. The recent local elections in Seoul (where the opposition had won 40 out of 52 seats) showed the strength of the Rhee opposition, which Herter thought had a good chance of winning the next national elections.

6. On the other hand, on the Chinese mainland itself, the Communist régime appeared to be facing very real problems. There was considerable evidence of discontent among the farmers over the malfunctioning of the land redistribution and farm collectivisation, and real shortages of foodstuffs over wide areas were creating serious problems. As in other Communist countries, there had been discontent among the intellectuals, including student groups, and there was also evidence that the over centralization of authority led to discontent within cadres of the Chinese Communist Party itself.

7. Turning to Southeast Asia, with the exception of Thailand and the Philippines which were partners in SEATO, and Indonesia (which he had not visited) Herter's impression was that the other states in the area, including Malaya, did not wish to align themselves with the USA in military pacts or arrangements. There was some feeling that they could in any event count in a major crisis on the USA deterrent and they were imbued with a desire to assert their newly won independence. This, he thought, was not so much "neutralism" as a determination not to revert to their old colonial status.

8. Burma, for example, found itself in a very difficult squeeze, with a dearth of population and a substantial surplus rice crop. Yet he was convinced that the present Burmese Government, although anxious not to take up a public position (presumably in order not to offend Communist China) was definitely anticommunist and would remain so.

9. He had talked to President Diem in Saigon who had been worried mainly about Vietnam's borders with Laos and Cambodia. Any invasion route by the Vietminh or the Communist Chinese to the South would logically lie through these two countries, and Diem, therefore, was concerned at strengthening his internal roads and borders with these territories. Diem's firm opposition to Communism needed no underlining. In Thailand, as in many other countries in the area, the problem of succession was a difficult one. Malaya had begun its new life under good auspices, and it had a good chance of making the grade. Herter mentioned that Mr. Richard Casey, whom he had seen at Singapore, had made private soundings on Malaya's interest in SEATO membership, but had concluded that it would not be wise to raise this question at this time. The first thing the Malayans wished to do was to stand on their own feet. Throughout Southeast Asia, Mr. Herter thought that the overseas Chinese, while not a strong political force, were an overwhelming commercial force, and wanted to be left alone to the greatest extent possible. He remarked that the worst threat which could be made to an overseas Chinese was to speak of deportation to Mainland China.

10. Reviewing the overall position, Mr. Herter said that while he had undertaken this mission somewhat in the mood of a "doubting Thomas" (presumably with reference to traditional USA positions and attitudes), he now felt that the maintenance of support for an independent Formosa was vital, and that the USA had nothing to gain and a good deal to lose by any modification of its traditional policy with respect to recognition of the Formosan Government. It was necessary for many reasons to keep the idea of a Free China alive. He recognized that this policy, which required substantial outlays by the USA might be difficult to maintain, but he thought the effort must and should be made in the period ahead.

11. We asked whether he would make any distinction between the recognition issue and the loosening of China trade policies. On this his conclusion was that the expected increase in trade with mainland China would not materialize, and he found pessimism in places like Hong Kong on the score of what could actually be done in the trade field even with strategic controls relaxed. One illustration he gave was of recent arrangements concluded between Ceylon and Communist China for a rubber-rice exchange. Here the Chinese deliveries had run far behind schedule, and disillusionment in Ceylon had been the only result. In this connection, he added that the UK recognition of China¹⁸⁴ had not been matched by the grant of any preferred trading position, and he thought that the recent revision of the CHINCOM regulations¹⁸⁵ would now enable the debate between the USA and its allies on this subject to be assessed on a more realistic basis than heretofore.

12. Trade difficulties were of particular concern to Japan which faced very real financial problems. Despite the good quality of recent rice crops, the pressure of population in resources continued. The Japanese were particularly worried about American tariffs and had been trying hard, although without too much success, to widen their markets in Southeast Asia. Finally, Mr. Herter was pessimistic about future election prospects in the Philippines, evidences of corruption, and the lack of any adequate leadership to replace the late President Magsaysay.

13. In conclusion, Mr. Herter said he was convinced that if the USA and free world position should weaken, there was a serious possibility that the position in Southeast Asia would deteriorate, and that the régimes in Korea and Formosa would lose hope and turn to the Communists. This, in turn, would have grave consequences for the independence of Japan which already had a strong Communist Party, although one which was under control at the present time. He saw, therefore, no real alternative to the present political and military policies now being pursued by the USA in the Far East. As he put it, it would be necessary to maintain "a stiff upper lip" in that part of the world for some time to come.

[N.A.] ROBERTSON

¹⁸⁴Le Royaume-Uni a reconnu officiellement la République populaire de Chine le 6 janvier 1950.

¹⁸⁵Voir chapitre III, 3^e partie, section B. See Chapter III, Part 3, Section B.