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written scripts if they exist, run their own schools with their own teachers and maintain their own local security forces. Again, they have more flexibility in the use of local funds.

The national minorities choose their own representatives in all parts of the system, from the provincial government to the production team. The local party cadre are members of the local nationality.

I visited the Institute for National Minorities in Kun-ming, which, since its establishment in 1951 has trained more than 10,000 cadre from the twenty-four nationalities. After two or three years of training, these young people return to their local area to work in party leadership in factories, communes, or other governmental units. Some remain to work in government at the provincial level.

Small factories to make chemical fertilizer, insecticides, farm machinery, textiles, tractors, and other products have been established in minority areas. The rate of progress varies from area to area, depending on location, the initial level of advancement of the minority group, and the size of the local industrial base. However, from all indications, the minorities are much better off today than they were 25 years ago. In the past some minorities were in danger of becoming extinct but the present availability of improved medical care has resulted in an expanding population. The minorities in Yunnan Province were described as having increased from 3 million in 1949 to 8 million.

I cannot comment on the handling of minority problems throughout China. In Kwangsi Chuang, Kwangtung, and Yunnan, however, the People's Republic appears to be making a determined effort to advance the interests and welfare of the national minorities and to preserve their cultures. The system now in effect should enable these groups to retain

the best of the past and still take part in the progress of the present. One Chuang leader in a rural area said to me simply: “Chairman Mao is the savior of the Chuang nationality.” China's approach to her minorities is not an application of the melting pot theory, but one which deliberately, with state encouragement and support, attempts to avoid homogenization of cultures.

Representatives of the minority nationalities with whom I talked seemed to think they had the best of both worlds-retaining their old traditions while sharing in the economic advantages of the Chinese People's Republic. As the leader of the Pai nationality put it: "Since liberation, some of the problems that remained unsolved for centuries have now been solved. Twenty-five years is not very long in terms of human history and we have only just begun to develop. Our progress is not great compared with the state of the Han. We have a lot of catching up to do. Our desire is to grow and develop within our nationalities and to help create a stronger Motherland.”

SUMMARY

The misery of the old China, where famines and pestilence were common and millions wandered aimlessly, is gone. So, too, are the political systems which nurtured it. In my judgment, there will be no turning back the clock to the past. Judging by appearances, the families in the communes and the workers in the factories are willing participants in the social revolution in China.

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from Taiwan and the Chinese civil war, a war which ended, for all practical purposes, more than a quarter century ago. In the context of the Shanghai Communique, as long as we are involved militarily on Taiwan, we are involved in China's internal affairs. In my judgment, there has been all too much evasion on this issue. It is in this nation's interests to bring our military posture in the Taiwan area into accord with the Nixon-Chou agreement of 1972. In addition to the heavy costs to the American people of maintaining the military connection with Taiwan, the current approach also inhibits our ability to gear our policies in the Western Pacific to today's realities.

Apart from the military side, there have been inconsistencies in other aspects of our policy. A few months ago, for example, a new ambassador was sent to Taiwan. Similarly, Taiwan was permitted to open two new consulates in the United States in 1974, making a total of five additional Taiwan consulates which have been established on U.S. soil since the signing of the Shanghai Communique: in Atlanta, Kansas City, Portland, Oregon, and on Guam and American Samoa. That is hardly the path to "normalization" of relations with the People's Republic. Government guarantees of private U.S. investments on Taiwan are still being issued and only recently the Export-Import

Bank made a $200 million loan to Taiwan at a minimal 6 percent interest and guaranteed an additional $100 million for construction of two nuclear power plants.

The fact that must be faced is that we cannot have it both ways. We cannot strengthen our ties with a claimant government of China on Taiwan and, at the same time, expect to advance a new relationship with the government of the People's Republic of China. The Shanghai Communique was designed as a transitional arrangement; it did not predicate an indefinite ambivalence in our China policy. Chinese officials made it clear that there could be no normalization of relations until the United States terminated diplomatic relations with Taiwan. Even a suggestion made recently that the U.S. Embassy in Taipei and the U.S. Liaison Office in Peking be switched, while keeping the security treaty intact, was regarded as unacceptable by the Chinese.

Chinese leaders emphasized that the surest way to normal relations is via the “Japanese formula.” The Japanese, it should be noted, have been able to maintain trade relations with Taiwan, notwithstanding a shift in diplomatic relations to the Chinese People's Republic. For the United States to follow this approach would mean terminating the defense treaty with Taiwan, withdrawing all U.S. troops from Taiwan, and severing diplomatic relations with Taiwan.

Periodically, the possibility of an independent Taiwan under a socalled two-China approach is raised publicly in the United States. Both the Taiwan authorities and the People's Republic agree on one point. Taiwan is a part of China, not an independent political entity. Nor does history give any credence to the concept of an independent Taiwan. There were various Chinese expeditions to Taiwan as early as the second century and Chinese migration to the island began as early as the sixth century. Taiwan was incorporated as a Chinese province in the 14th Century, and large influxes of Chinese came to the island from Fukien and Kwangtung provinces during the 16th and 17th Centuries. In the 17th Century, under the Ching dynasty, Taiwan

was incorporated into Fukien province and later was made into a separate province. The Chinese exercised sovereignty over Taiwan until May 8, 1895 when, under terms of the Treaty of Shimonoseki, ending the Sino-Japanese war, the island was ceded to Japan. For fifty years, Japan exercised control over the island.

In 1943, the United States and the United Kingdom agreed with China that "all territories Japan had stolen from the Chinese, such as Manchuria, Formosa, and the Pescadores, shall be restored to the Republic of China.” In keeping with this pledge, the Chinese nationalist forces received the surrender of the Japanese troops on Taiwan in 1945. Chiang Kaishek established a provisional capital at Taipei in December 1949 following his flight from the mainland.

There is no question that Taiwan has been a direct part of China since 1683, excluding the period of the Japanese occupation from 1895– 1945. Chinese culture and civilization have prevailed on the island from as early as the 2nd Century. Although a two-China policy may appear to be an easy way out of a difficult situation, in the light of the above circumstances and after the Nixon-Chou Shanghai Communique, I believe that for this nation to pursue such a course would be most inadvisable, if not improper. In my judgment it would not be in our nation's interest or in the interests of stability in the Western Pacific.

As for our defense treaty with Taiwan, it seems to me that it is properly seen as a relic of the past. Treaties are not chiseled in stone. To serve the public interest, treaties like any other aspect of a nation's foreign or domestic policy, must be kept current. We must match our commitments, particularly those which could embroil us in vet another foreign war, to our contemporary interests.

Whatever we mav do, the Chinese are confident that one day Taiwan will be reunited with the mainland. While the Chinese leaders insist that was to how and when Taiwan will be returned" after the United States terminates its ties with the island is their internal affair, they also "hope there will be a peaceful solution."

TRADE MATTERS

China's priorities in foreign trade have emphasized the purchase of goods especially related to the expansion of food production. Major imports have been complete plants, machinery and equipment. Trade is also used to overcome significant bottlenecks in domestic production or internal distribution and for acquiring design prototypes. Until recently, at least, the People's Republic has avoided long-term foreign credits but has used medium and short-term commercial credits to finance some imports.

Total foreign trade in 1959 was about $4.3 billion, when it then dropped, not to reach that level again until 1970. But in 1973 there was an increase to $9 billion, with about a $300 million deficit. It is estimated that trade totaled between $12 billion and $14 billion in 1974, 80 percent of that with non-communist countries. It is too early to tell how the 1974 balance will come out, although China is concerned over the impact of inflation on import prices as well as over the softening of the export market for some of its products. Large amounts of imports planned for 1974, including U.S. grains, have been postponed until 1975.

PETROLEUM

In 1973 China entered the international oil market with the sale of one million tons of crude oil to Japan and, in the following year, entered into arrangements for substantial shipments to the Philippines. The latter commitment was made in conjunction with the well-received visit of Mrs. Imelda Romualdez Marcos, the wife of the Philippine's President.

China has been self-sufficient in petroleum since 1965 and for several years prior to the 1973 sale to Japan, had been exporting petroleum products to North Vietnam, North Korea, and Albania. The Chinese are now looking to crude oil as a major earner of foreign exchange, to help finance increased imports of industrial plants and equipment. The old slogan, "oil for the lamps of China," used by Western traders to exploit China for so long, has been given an ironic twist.

The continental shelf off China's shore, particularly the areas between Taiwan and Japan and under the Yellow Sea, are considered by many petroleum experts to contain some of the richest oil reserves in the world. China's coastline extends from the Bay of Korea in the North to the Gulf of Tonkin in the South and the continental shelf slopes gently out as far as 200 miles in some places. No one really knows how great the offshore potential is since exploration began only recently. Deep sea drilling rigs have been bought from Japan and additional exploration equipment has been purchased from the United States and other countries. However, most of the petroleum technology being used to develop China's oil resources, offshore and on land, is China's own. China recently announced, for example, the bringing in of its first offshore well in the Yellow Sea, using a rig built in a Shanghai shipyard.

There will be thorny international problems in developing some of the offshore oil potential along Asia's periphery. Following the publication of the results of a 1968 United Nations sponsored geophysical survey of the Chinese continental shelf, Taiwan, Japan and South Korea each advanced overlapping claims to parts of the region. In December 1970 the People's Republic issued its claim to the continental shelf and to ownership of the Senkaku Islands, although the latter are also claimed by Japan and Taiwan. While U.S. policy is to lend no encouragement to exploration in the disputed areas, some U.S. companies have obtained concessions from Taiwan. Specifically, these corporations are Gulf, Amoco, Conoco, Oceanic, Clinton and Texfel. Several of the concessions lie off the Senkakus. However, no U.S. drilling operations have yet been conducted in that area but Amoco, Gulf and Conoco have been involved in drilling off the west coast of Taiwan in the Taiwan straits, with the work being done by American-owned vessels of foreign registry and manned by foreign crews. There have been no U.S. Government investment guarantees issued for these drilling operations.

There is also an oil potential in the Paracel Islands, southeast of Vietnam, claimed by both South Vietnam and China but occupied solely by China. In fact, the People's Republic had a drilling rig on one of the islands at the time of a military encounter there between the two countries in 1974. There are also conflicting claims of China,

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South Vietnam, the Philippines and Taiwan to the Spratly Islands which also lie to the southeast of Vietnam. With oil reserves an increasingly important asset, overlapping claims off the Asian littorals contain the seeds of very serious difficulties. While the United States should not shirk participation in international efforts to deal in a rational way with these difficulties, we should not provide government incentives or otherwise lend encouragement to companies which wish to plunge ahead with exploration and development in disputed areas.

In addition to an offshore potential, China has very promising internal oil bearing basins. In fact, the main emphasis is still on land exploration. Estimates of China's total reserves have been consistently revised upwards over the last ten years. Even approximate figures on how much oil China may have are not available. The general view, however, is that the potential is very great.

I was informed that China's oil production was now “in the same range as Algeria's, perhaps a little more.” Chinese output is increasing at the rate of twenty percent annually. If this rate is maintained, it would push production to over 400 million tons by 1984, compared with an estimated 60 million plus tons in 1974, making China a major factor in the world petroleum trade.

China sold 5 million tons of crude oil to Japan in 1974, earning about $450 million, and is said to have committed 10 million tons for 1975. Smaller amounts have been sold to the Philippines and Thailand. There are also reports that China has offered to sell oil to U.S. companies. China's 1975 petroleum exports are expected to be double the 1974 level and to continue to climb as new production comes in. Output is limited only by a shortage of equipment and transport.

Some pertinent points about China's oil export potential are brought out by the following excerpt from a recent analysis:

Peking's plans to expand oil exports substantially during the next five years are borne out by the construction of new oilhandling facilities at the ports of Chin-huang-tao and Tsingtao and the purchase of dredging equipment needed to make Chinese ports deep enough for large tankers of more than 50,000 DWT to transport crude oil for export. The tonnage of tankers in the Chinese international fleet has doubled in the past year and now totals almost 200,000 DWT.

The goal of 50 million tons of crude oil for export in 1980 appears feasible. Reserves are large enough, even without production from offshore fields. If production accelerates, or even if it only continues to grow at 22 percent—the rate achieved during 1965–1972—the PRC could export 50 million tons in 1980 and still provide a generous leeway for using oil to modernize the

economy. As a developing country, China needs increasing amounts of petroleum. The potential for export, therefore, may not be as great as it seems at first glance although it should be substantial because the Chinese do not use energy or any other commodity for that matter in a wasteful or profligate manner. Indeed, if the United States followed even a part of the Chinese practices in the use of petroleum, this nation would be more than self-sufficient.

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