CHINA AND DOWNGRADING THE US RELATIONSHIP

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B01072R000300020005-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 12
• Document Creation Date: December 21, 2016
• Sequence Number: 5
• Content Type: MEMO

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State Dept. review completed
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Central Intelligence Agency
2 3 J U L . 82
The Honorable William P. Clark
Assistant to the President
for National Security Affairs
The White House
Washington, D.C. 20500
Dear Bill:
In response to your request of 7 July, this analysis
provides our views on the likely course and consequences of
downgrading in US-China relations.
William J. Casey
Director of Central Intelligence
The Process and Aftermath
A Downgrading of US-PRC
Relations
State Dept. review completed
Downgrade to Unclassified
When Attachment is Removed
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21 JUL
MEMORANDUM FOR: The Director of Central Intelligence
FROM Robert M. Gates
Deputy Director for Intelligence
SUBJECT China and Downgrading the US Relationship
The Chinese' replied on 17 July to the final US position on
arms sales to Taiwan with a counterproposal that accepts our
language on arms sales. Their proposal, however, also removes
the linkage, which we want, between China's policy on peaceful
reunification and the future of US arms to Taiwan. The Chinese
asked to move quickly to line-by-line negotiations; the Depart-
ment is now preparing a response to their latest draft for
White House approval. If agreement is not reached by the end of
August, when Congress will be formally notified on extension of
the F5E coproduction line on Taiwan, that action is virtually
certain to prompt China to begin downgrading relations.
This paper is the latest in our series of analyses for NSC
and State on the consequences of various moves in the negotiations.
We were not asked to address whether downgrading will occur, but
to spell out its mechanics, and implications, and international
reaction to the process. Essentially we conclude that the Chinese
would:
-- publicly curtail the most visible aspects of their
political and security relationship, beginning with the
withdrawal of their and perhaps our Ambassador;
-- preserve their commercial and educational ties with the
US, hint at but not follow through on economic
retaliation and cultivate the political opposition in
the US to change future US policy; and
-- try to influence Washington by manipulating allied and
Soviet reaction, which together would regard downgrading
as a net loss to the US strategic position.
obert M. 7es
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I I
Central Intelligence Agency
DIRECTORATE OF INTELLIGENCE
23 July 1982
THE PROCESS AND AFTERMATH OF A DOWNGRADING OF US-PRC RELATIONS
Key Judgments
If the US and china fail to reach a public understanding on
the Taiwan issue in the next few weeks, Beijing will cite new US
arms sales to Taipei as the cause for downgrading bilateral
relations. Fundamentally, however, China will act on the
conviction that the potential for cooperation with the United
States has significantly eroded since 1979-80, when Chinese
China's criticism of the Administration's policies on Taiwan
and in several other areas has grown slowly but steadily since
the presidential campaign in 1980 when the Chinese became
concerned about the possibility of changes in US policies
unfavorable toward Beijing and favorable toward Taipei. Beijing
regards a settlement of this problem as a litmus of US
willingness to treat China as a sovereign Dower and an equal
In downgrading relations, the Chinese will make the costs
clear to Washington, play on US allies' concerns, and argue their
case in the US, where they will suggest that new policies under a
This memorandum was prepared by China
Foreign Affairs Branch, China Division, Office of East Asian
Analysis, Directorate of Intelligence, in response to a request
of the National Security Council.
25X1
SECRET
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future leadership would revitalize the strategic benefits from
the relationship. Beijing will also attempt to pressure
Washington through the private sector by threatening the loss of
commercial opportunities in China. The Chinese will attempt to
manage their tactics carefully, but excessive bureaucratic zeal
or domestic political rivalries might accelerate the downgrading
process, with unexpected and unfavorable consequences.
China is unlikely to change its approach toward the USSR_
following a downgrading, although Beijing may more actively
allude than in the past to its range of options in dealing with
Moscow in an attempt to influence US attitudes and policies. The
Soviets would welcome downgrading; they may step up their efforts
to portray their own flexibility toward China, while playing on
the perception that the US has lost a strategic asset. The
Allies in Europe and East Asia would see a weakening in the US
strategic posit.i'on vis-a-vis the Soviet Union because of
downgrading; in Southeast Asia, the reaction would also include
some concern about the diminished US influence on China's
behavior.
Downgrading: The Mechanics and Chinese Tactics
China's strategy for downgrading would probably follow the
precedent set in early 1981, when Beijing reduced its relations
to the charge level after the Netherlands sold submarines to
Taiwan. We believe, however, that the Chinese want to avoid
drastic diplomatic action that would make it difficult to
reinstitute a normal relationship if an agreement on Taiwan is
reached in the future. We also believe that Beijing wants to
maintain diplomatic relations with the US and preserve the
current structure of trade and educational exchanges--sources of
real benefit to the Chinese. Downgrading, therefore, would
likely be limited to curtailing the most visible aspects of our
current political and security relationship.
In this context, Beijing would use the completion of the
Congressional notification procedure on an arms transaction as-a
pretext to begin downgrading. At that time, we believe the
Chinese would formally withdraw Ambassador Chai and perhaps
.request the recall of Ambassador Hummel. The result could leave
charges d'affaires in place for some time.
These steps would represent the minimum necessary for
Beijing to make downgrading a credible pressure tactic. The
Dutch "precedent" allows for more dramatic steps, but we do not
believe that Beijing wants to strictly follow the model. That
would require a return to the level of diplomatic
representation--small liaison offices--prior to US-China
normalization in 1972.
In our view, cutbacks in political and security ties almost
certainly would include the cessation of high-level visits and
strategic consultations, a drop in official travel between China
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and the US not related to educational or commercial exchanges,
and tighter restrictions on official contacts with US diplomatic
personnel in China. The Chinese probably would ask for a
reduction in the size of the Defense Attache Office in Beijing,
might request the reduction of the overall size of the US
Embassy, and could delay the planned openings o,f new consulates
in both countries.
We believe the currently planned Twelfth Congress of the
Chinese Communist Party in September or October is a complicating
factor that could influence the downgrading process. Deng
Xiaoping's politicking before the Congress, for example, might
bring him to attempt to gain concessions on domestic matters by
accommodating rivals who previously have opposed his policies
toward the US.- At the same time, he could choose to move toward
those critics to forestall a more vigorous attack from them on
the US relationship. In addition, China already has begun
restricting contacts with foreigners, which we believe reflects
growing official hostility toward all foreign influence--not just
the US. Such hostility could provoke resentment over a perceived
violation of Chinese sovereignty following the sale of weapons to
Taiwan. At a minimum, it is likely to make bureaucrats at all
levels anxious to toe the line in any prescribed downgrading
process, which in turn could lead to a sharper Chinese response
that we now anticipate.
Downgradinq: Costs to the United States
The Taiwan issue and the more general adjustments in Chinese
foreign policy since last year--reasserting Beijing's role in the
Third World and more sharply defining differences with the US on
issues such as Israel and South Africa--have already set new
limits on bilateral cooneration. In our view, the changes in
Chinese policy indicate that Beijing has revised its initial
optimism about prospects for collaboration with Washington.
Publicly, as well as privately, the Chinese are more downbeat
about US policies in Latin America, Africa and elsewhere, arguing
that US behavior is allowing Soviet inroads. As a consequence-,
they have put more distance between their stands and US policies
in several regions, where, in our view, even an end to the Taiwan
problem now seems unlikely to bring a substantial) closer
alignment with the US.
Downgrading will make Chinese foreign policy even more
competitive with the US. Beijing will accentuate its public
condemnations of US "hegemonism"--its codeword for Soviet
behavior--and become more open in exploiting "anti-imperialist"
themes to enhance its standing in the Third World. Along with
more intense rhetorical attacks on US policies, the Chinese may
try to undercut some US positions.
For example, Beijing could ignore US nonproliferation
concerns in Pakistan and also turn aside US interests in
sustained consultations in Southeast Asia. The Chinese will
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tailor their actions to demonstrate to the US the cost of the
Taiwan problem, but without attacking those aspects of US policy
that basically benefit Chinese interests. Indeed, the Chinese
probably believe they have some leeway in these areas to
criticize Washington without undue concern over shifts in the
anti-Soviet direction of US policy.
Chinese officials repeatedly have asserted) I 25X1
that downgrading will not affect Beijing's basic 25X1
policies toward7the USSR. That message has also been carried in
the media, which continues to portray China's opposition to the
Soviet Union as the centerpiece of its policy. Increased
low-level exchanges with the USSR, however, make clear that
Beijing intends to seek a lowering in tensions with Moscow and,
in the event of a deterioration in Sino-US relations, will
attempt to heighten US concern about a significant improvement in
Sino-Soviet relations. 25X1
Whether or not downgrading occurs, we believe that China
will keep pressure on the US regarding Taiwan and the arms sale
issue. If the relationship is downgraded, Beijing could
reintroduce military exercises or similar moves in the Taiwan
Strait as a way to remind the US that it had not abandoned a
military option, and that Chinese restraint in the area should
not be assumed. We believe that any such actions would be
limited in scope
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tailor their actions to demonstrate to the US the cost of the
Taiwan problem, but without attacking those aspects of US policy
that basically benefit Chinese interests. Indeed, the Chinese
probably believe they have some leeway in these areas to
criticize Washington without undue concern over shifts in the
anti-Soviet direction of US policy. 25X1
Chinese officials repeatedly have asserted to US and third
country visitors that downgrading will not affect Beijing's basic
policies toward the USSR. That message has also been carried in
the media, which continues to portray China's opposition to the
Soviet Union as the centerpiece of its policy. Increased 25X1
low-level exchanges with the USSR, however, make clear that
Beijing intends to seek a lowering in tensions with Moscow and,
in the event of a deterioration in Sino-US relations, will 25X1
attempt to heighten US concern about a significant improvement in
Sino-Soviet relations.
Whether or not downgrading occurs, we believe that China
will keep pressure on the US regarding Taiwan and the arms sale
issue. If the relationship is downgraded, Beijing could
reintroduce military exercises or similar moves in the Taiwan
Strait as a way to remind the US that it had not abandoned a
military option, and that Chinese restraint in the area should
not be assumed. We believe that any such actions would be
limited in scope
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the Chinese would not publicize these
activities or allude to them in a way that contradicted their
continuing public emphasis on peaceful reunification.
Chinese leaders have told visiting US officials that they
want to keep their economic ties with the US intact, but we
believe Beijing is certain to threaten obliquely selected US
firms in an effort to warn Washington about the effect of US arms
sales to Taiwan. The Chinese are also likely to point to
additional economic opportuntiies in China for the Western
Europeans and the Japanese as a result of US policy actions,
although decisions on new trade and investment will still depend
on China's own economic policies and internal conditions. If any
major programs now involving US and other competitors are awarded
to non-US firms--equipment for China's nuclear industry, for
example--Beijing..will be certain to convey the alleged
"political" rationale for the choice to official as well as
private sector US contacts.
Reactions Among Allies and Adversaries
In our view, Western Europe and Japan have regarded improved
US-China relations over the past decade as contributing to
stability in Asia, encouraging China's turn to the West, and
adding to US leverage with the Soviet Union. The Europeans and
the Japanese also regard relations with China as basic to their
own Asian policies. Despite their profitable trade and
investment links with Taiwan, allied officials at several levels
have told US counterparts that they doubt that Taiwan's need for
new weapons justifies actions that would jeopardize the benefits
of Washington's ties with Beijing.
Chinese contacts with key US allies have already prompted
some--the British and the Japanese--to counsel compromise on both
sides. These discussions and the regular relay to Washington of
other Chinese warnings about the dangers in downgrading by the
allies have probably temporarily exhausted Beijing's ability to
use these avenues to pressure the US directly. The Japanese, who
have dealt with Beijing sufficiently to understand the US
dilemma, would probably react sympathetically to the US position,
despite the complications downgrading would create in their
relations with China. The West Europeans would probably be less
understanding and will privately, if not publicly, blame US
policy for losing a widely perceived strategic asset. The
British and the French may attempt to broaden their relations
with China in order to preserve a bridge between China and the
If a downturn in the US-China relationship occurs, we
believe the NATO allies will initially address its implications
for US and Soviet policy toward European security issues. Some
may hope that a cooler US relationship with China will help allay
the Soviet's security concerns, but most probably will expect
sharper competition between Washington and Moscow.
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Other reactions in Asia would reflect concern and
uneasiness. In private discussions with US visitors, South Korean
officials consistently have regarded US-China normalization as an
element for stability on the Korean peninsula. A deterioration
in Sino-US relations, we believe, would increase Seoul's
anxieties about the advice Beijing will give Pyongyang and about
its own efforts to establish commercial and political links with
Beijing. Reaction in ASEAN will vary, although ASEAN leaders
would be concerned that an element of restraint on Chinese policy
in Southeast Asia has been diminished. Despite its previous
expressions of concern over US intentions toward China, even
Indonesia would fear that any weakening of the US connection
would make China a more active threat to its interests.
Taiwan would be pleased by the downgrading of US-China
relations, but would be unlikely to express its satisfaction in a
manner calculated to goad Beijing into further retaliation
against the US. How Taiwan would treat the Chinese peaceful
reunification campaign following downgrading is uncertain, but we
believe Taipei probably would conclude that there was
considerably less need to appear responsive for the benefit of a
Uncertainty in Moscow about the extent and duration of
downgrading would probably produce an initially cautious
attitude, although the Soviet media would move quickly to extract
maximum publicity from the downturn. The Soviets would attempt
to play on the view, particularly in West Europe, that the US had
denied itself a strategic asset and would portray this as an
indication of incoherence and inconsistency in US policy.
If the Soviets eventually concluded that downgrading in
US-China cooperation was enduring, they would believe that the
potential threat of strategic encirclement had been at least
temporarily relieved. At START talks in Geneva, for example, the
Soviets recently warned that they would demand that the talks
include Chinese nuclear weapons if the cooperation between the US
and China were to broaden--a statement, albeit intended primarily
for the record, that underscores the depth of Moscow's concern
over a firm US-China relationship.
In general, we believe Beijing will claim to audiences in
the US and in key allied capitals that the onus for downgrading
rests on this Administration and its policies. In so doing,
however, the Chinese will not close the door on negotiations over
the Taiwan issue. The Chinese also will emphasize that new US
policies on Taiwan or a new US leadership could expect to gain
greatly from a re-establishment of normal relations.
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