Accidental State

CHIANG KAI-SHEK, THE UNITED STATES, AND THE MAKING OF

TAIWAN

Hsiao-ting Lin

Cambridge, Massachusetts
London, England
2016
 Copyright © 2016 by the President and Fellows of Harvard College
All rights reserved

Cover art: Courtesy of the KMT Party History Institute

Cover design: Lisa Roberts

978-0-674-65981-0 (cloth)
978-0-674-96962-9 (EPUB)
978-0-674-96963-6 (MOBI)

The Library of Congress has cataloged the printed edition as follows:

Lin, Hsiao-ting, author.
Accidental state : Chiang Kai-shek, the United States, and the making of Taiwan / Hsiao-ting Lin.
pages cm
Includes bibliographical references and index.
1. Taiwan—History. 2. Taiwan—Politics and government—1945–1975. 3. Chiang, Kai-shek,
1887–1975. 4. United States—Foreign relations—1945–1953. 5. Taiwan—Foreign relations—1945–
6. China—Foreign relations. I. Title.
DS799.816.L55 2016
951.24905—dc23
2015026007
 Contents

Acronyms and Abbreviations

Introduction
1. Taiwan in the Balance
2. A Troubled Beginning
3. Reformulating U.S. Policy toward Taiwan
4. Chiang Kai-shek in Eclipse
5. Last Gasp on the Mainland
6. Floating State, Divided Strategy
7. U.S. Military and Security Policy Goes Underground
8. The Island Redoubt Reinvigorated
9. Between Mainland and Maritime Strategies
10. The Making of an Island State
Conclusion

GLOSSARY OF NAMES AND TERMS

NOTES

BIBLIOGRAPHY

ACKNOWLEDGMENTS

INDEX
 Acronyms and Abbreviations

CCP Chinese Communist P art y

CIC Commerce Int ernat ional China, Inc. (New York)

CINCPAC Commander in Chief, P acific Command (Unit ed St at es)

CRC Cent ral Reform Commit t ee (KMT )

ECA Economic Cooperat ion Administ rat ion

ESB Economic St abilizat ion Board (Nat ionalist government )

FLR Formosa League for Re-emancipat ion

KMT Kuomint ang (T he Chinese Nat ionalist P art y)

MAAG Milit ary Assist ance Advisory Group (Taipei)

MAP Milit ary Assist ance P rogram

NAT O Nort h At lant ic T reat y Organizat ion

NSC Nat ional Securit y Council

OSS Office of St rat egic Services

P LA P eople’s Liberat ion Army

P RC P eople’s Republic of China

ROC Republic of China

SCAP Supreme Commander of t he Allied P ower, Japan

ST P Special Technician P rogram (Charles M. Cook’s init iat ive in Taiwan)

UNRRA Unit ed Nat ions Relief and Rehabilit at ion Administ rat ion
 Introduction

THIS BOOK EXPLORES the historical formation of a de facto state on Taiwan

separate from the de facto state ruling the Chinese mainland in the late 1940s
and early 1950s. Too often we have tended to view the existence of the two
political entities across the Taiwan Strait as a logical and most likely
consequence of the Chinese civil war, fought bitterly after World War II
between the Chinese Nationalist Party (Kuomintang; KMT) under Chiang
Kai-shek and the Chinese Communist Party (CCP) led by Mao Zedong.
Indeed, by 1949, as the KMT was losing control over the mainland, its
leaders sought to turn Taiwan into a strong territorial base, where they were
safeguarded against possible invasion by physical barrier of the Taiwan
Strait, and were subsequently under the protective shield of the United States
after the outbreak of the Korean War in 1950. Because the Chinese
Communists lacked naval and air capabilities to invade Taiwan in those
early years, Chiang Kai-shek and his staunch followers were able to retreat
to their island base, where they could nurture hopes of launching a military
campaign to recover the Chinese mainland in the decades that followed.1
The story told here, however, is much more nuanced and richer than the
above simplistic view would suggest. Based on both English and Chinese
archival materials, notably newly released Republic of China (ROC) official
files, KMT records, and the personal papers of top leaders, including Chiang
Kai-shek and T. V. Soong, this book seeks to draw a different picture and
retell the story. It argues that the formation of a Nationalist state in Taiwan
was a far more complicated and intriguing process than the conventional
wisdom has depicted. It argues that the making of the separate Taiwan state
was not the result of deliberate forethought and planning either by the United
States, the KMT, or the CCP. Rather, it was the outcome of many ad hoc,
individualistic factors and decisions related to war or alliance maintenance,
or even serendipity. It demonstrates the complex and critical role of the U.S.
government and various American individuals, as well as the U.S. policy, as
consistent determining forces in shaping this accidental island state. In a
broader sense, the book analyzes the overall collapse of the Nationalist
regime under Chiang Kai-shek following the end of World War II in the
context of the looming Cold War. In addition to showcasing the various
internal political struggles within the Nationalist camp as its downfall began,
this research illuminates how these struggles intersected with the wider
geostrategic concerns of other powers, particularly the United States.
Strictly speaking, this book is not a study of the conflict between the
Chinese Nationalists and the Chinese Communists or why the Communists
were victorious in 1949. Rather, it shifts away from the common focus on
explaining the Communist triumph on the mainland, toward looking at how
Taiwan was positioned within the greater framework of East Asian
international politics and China’s domestic landscape surrounding Japan’s
surrender in 1945. It begins with Taiwan as a Japanese colony, then examines
the island as a frontier province newly returned to postwar ROC. As civil
war ravaged all of mainland China, the island eventually became the seat of
the Nationalist Chinese state, a historical phenomenon that, in retrospect, was
hardly intended either by the Chinese Nationalists or the Americans.
Located in the western Pacific, just off the Chinese mainland’s
southeastern coast, the island of Taiwan now comprises most of the land area
of the state known officially as the Republic of China—also called
Nationalist China, Free China, and more recently, the Republic of China on
Taiwan. Communist Chinese leaders in Beijing regard Taiwan not as a
sovereign state but rather an outstanding territory belonging to the People’s
Republic of China (PRC). In the past several decades, the ROC government
in Taipei under the KMT likewise formally espoused a one-China policy
and, until 1991, claimed sovereignty over all of China. However, its main
opponent on the island, the Democratic Progressive Party (DPP), the ruling
party of Taiwan between 2000 and 2008, contended that the island was not a
part of China and should instead be treated as a separate, independent, and
fully sovereign nation-state. The issue divides the island’s population and
society. In any case, no one will deny that Taiwan’s relationship with
mainland China has been, and will continue to be, of critical importance in
any discussion or study of the future of Taiwan.
Today, the Cairo Conference of 1943 and the resultant joint communiqué
by Franklin D. Roosevelt, Chiang Kai-shek, and Winston Churchill has
generally been viewed as an important watershed leading to the eventual
return of Taiwan and the Pescadores (also known as Penghu) from the
Japanese to China. Before China formally declared war with Japan on
December 9, 1941, the Nationalist government was in no legal position to
reclaim the territories officially ceded to the Japanese by the Qing court. At
the Cairo Conference, with the support of the United States, Chiang secured
promises from his wartime allies that his government could take over the
island when World War II came to an end. However, behind this seemingly
unanimous agreement lay a much more complicated landscape. Within
Nationalist China’s governing circles, even in the final stages of World War
II, questions concerning Taiwan’s future political and administrative status,
as well as its relationship with the mainland, remained pending and
controversial. In the United States, in the months surrounding the summit in
Cairo, Washington’s planning circles were roiled by sharp debates and
divergent policy formulations as to how Taiwan could best serve America’s
postwar diplomatic and geostrategic interests in the Far East while
supporting Nationalist China’s recovery of that island.
Those wartime internal policy debates over Taiwan within Washington’s
military and diplomatic quarters never quite overturned the ultimate decision
that the island should be occupied by Nationalist China in the immediate
aftermath of the Japanese surrender. Nevertheless, some apparently trivial
policy drafts and proposals on the part of the United States before and after
V-J Day turned out to have critical influence on the fate of Taiwan. One such
instance was the sudden withdrawal of American involvement in the Allied
takeover of the Japanese properties on the island, a decision made just
shortly after the Japanese surrendered. Without a greater American role in the
Allies’ overseeing or moderating the takeover operations, the Nationalist
provincial authorities under Chen Yi went their own way, allowing local
Taiwanese islanders’ bitter resentment to grow rapidly, leading to the
February 1947 bloodshed in Taiwan.
As the overall situation increasingly worsened in postwar China during
the final years of the 1940s, U.S. wartime hypothesizing, which had no real
chance to be implemented, gradually served as a new basis for Washington’s
shifting stance toward the Taiwan issue. The theory that Taiwan should be
placed under an Allied trusteeship instead of being handed over to China, a
highly theoretical idea forged first by planning-level officials like George H.
Kerr during the war years, was one salient example. After the February 28
massacre, when more Taiwanese thought that they were not, in any case, that
kind of Chinese and began advocating the island’s autonomy or independence
from China, Kerr’s unimplemented theory quietly became one crucial option
vis-à-vis Taiwan for Washington’s top authorities. And its political
repercussions, as well as its impact on the U.S.-Nationalist Chinese
relationship, lingered on into the early 1950s and beyond.
The role the Americans played in the February 28 incident also deserves
further scrutiny. Chiang Kai-shek’s officials acridly blamed George Kerr,
then serving as the American vice consul in Taipei, for instigating the
islanders’ rebellion against the Chinese rule, leading to Kerr’s disgraceful
recall. Yet in an oblique fashion, Kerr’s personal suggestions regarding how
Taiwan might be best governed found its way to top Nationalist leaders.
After the tragedy, Chiang appointed a civilian official to replace the much-
hated governor Chen Yi, and more local Taiwanese were recruited into the
new provincial authorities. More significantly, with the reform of the island’s
commercial and industrial infrastructure after the massacre, more freedom
was allowed, and private enterprise boomed in Taiwan. In hindsight, this
marked the beginning of a gradual shift of Taiwan’s economic policy, and a
salient departure from Chen Yi’s command economic philosophy on the
island. The preliminary reforms undertaken in the aftermath of the February
28 incident were originally intended both to pacify the native Taiwanese and
to fulfill the goal of making the island a role model for the mainland Chinese
provinces. It therefore was a historical accident when those post-traumatic
measures inadvertently laid the foundation for the subsequent formation of a
Nationalist island state. Notably, George Kerr played a role in injecting into
State Department policy debates in May 1947 the idea of American
involvement in shaping the evolution of a more benevolent, liberal political
situation in Taiwan. U.S. policy thereby moved toward creating a certain
kind of political-economic setup on that island, even though very few
imagined at this juncture that this new policy direction would also lead to an
unintended state after 1949.
Trusteeship for Taiwan gradually became a popular idea not only among
the pro-independence Taiwanese, but also among some of Washington’s
military and political chiefs as a result of the islanders’ escalating discontent
with Nationalist governance. Worse still for the Chinese Nationalists, as their
civil war with the Communists went from bad to worse, a deeply pessimistic
view of their capabilities led policy designers in Washington to start moving
to wash their hands of the KMT, even going so far by the end of 1949 as
being willing to sacrifice Taiwan to the newly inaugurated PRC as part of the
effort to court “Chinese Titoism,” a reference to Yugoslav dictator Broz
Tito’s Cold War international politics. On the other hand, many in the Truman
administration who did not wish to see Taiwan fall into Communist hands
came around to the view that China’s sovereignty over Taiwan had not been
established, and that the island should be legally acquired by the Chinese
government only after a formal peace treaty with Japan was concluded.
This study goes one step further by underscoring a previously unnoticed
factor adding to the American belief that Taiwan should be treated as
separate from the Chinese mainland. As the Chinese civil war intensified
during the last months of 1947, a prevailing perception among foreign
observers, including American diplomats and their British counterparts, was
that a war-burdened China would inevitably return to a condition of
regionalism similar to the early Chinese Republic warlord era. Toward mid-
1948, overall developments in China led American officials, both civil and
military, to agree that a gradual territorial division, coupled with the
emergence of new regional regimes, was the most likely scenario in trouble-
ridden China.
It was within this larger strategic conceptual framework of the
inevitability of a disintegrated and regionalized China that a new Taiwan
formula began to take shape within the Truman administration. After Chiang
Kai-shek stepped down as the ROC president in early 1949, the United
States found it both imperative and politically plausible to search for suitable
candidates to lead Taiwan’s political and military structure. Chen Cheng, Sun
Liren, and K. C. Wu (Wu Guozhen) were at the top of the lists of individuals
for which Washington had much hope. This American endeavor to find
whoever was capable of handling situations was totally unacceptable to a
“retired” Chiang Kai-shek, who was still trying to rule from behind the scene
and to search for a strategy for survival. During the first half of 1949,
Chiang’s idea was to create a strategic territorial triangle in Southeast China,
encompassing Taiwan, Zhejiang, and Fujian provinces. But at this stage, the
greatest challenge confronting his political enterprise was not so much from
the Chinese Communists as from his increasingly unbridled (former)
Nationalist military subordinates. As Chiang lost support from the Truman
administration, his relationship with key Nationalist military leaders
understandably became much more difficult.
Chen Cheng, whom Chiang Kai-shek had handpicked as Taiwan
provincial governor just before he stepped down, played a rather weighty
role in determining the island’s future. Contrary to a conventional view
portraying Chen merely as a loyal protégé of Chiang, this study aims to tell a
different story. In mid-1949, when Chiang no longer headed the Nationalist
central government, Chen found it necessary to court the Guangxi Clique and
Acting President Li Zongren so as to strengthen Taiwan’s position vis-à-vis
the precarious, soon-to-become Communist mainland. Several measures
taken by Chen at this juncture later proved to be vital to the future of Taiwan;
in hindsight, Chen’s ostensible defiance of Chiang’s wish and his going to
meet Li Zongren in Guangzhou in May 1949 turned out to be one critical
turning point in Taiwan’s fate. Actions taken by Chen proved to be crucial.
Meanwhile, with the likelihood that the United States would exploit
Taiwan’s inconclusive legal status to prevent the island from falling to the
Communists, Chiang found that his returning to the mainland to seek a
possible territorial citadel had become an unavoidable choice.
The fall of Nanjing and Shanghai to the Chinese Communists in the spring
of 1949 brought further chaos and uneasiness within the diminishing
Nationalist-held domain south of the Yangtze River. Toward the end of 1949,
both Chiang Kai-shek and Li Zongren targeted the southwest Chinese
provinces as an ideal place where a lasting anti-Communist redoubt might be
established. Again, U.S. policy formulation played an influential part in
determining the outcome of the collapsing Nationalist state’s eleventh hour.
As potential aid from America to China were becoming “regionalized,”
meaning that future resources to China would very likely be given to regional
leaders or local regimes carrying anti-Communist resistance, rather than to a
rapidly disintegrating central authority, a veiled struggle between Chiang and
his Guangxi Clique rivals intensified over Southwest China. A hitherto
untold story of the abortive Yunnan independence movement fully elucidates
the intrigue in the political and diplomatic landscape at a regional level, with
America involved in the final stage of the Nationalist rule on the mainland. In
early December 1949, when Washington turned down the request from Lu
Han, the Nationalist governor of Yunnan province, that it support his
declaration of independence, the governor decided to hand the province over
to the Communists. This turn of events dimmed Chiang Kai-shek’s and his
Nationalist followers’ last hope to establish their final territorial base on the
mainland, and their flight to the island of Taiwan became the unavoidable
and only option.
By the time the seat of the crumbling Nationalist government was moved
to Taipei in late 1949, Nationalist China’s territorial scope had been reduced
to Taiwan, Hainan Island, and a string of offshore islets along China’s
southeastern littoral. When the Truman administration reiterated its hands-off
policy toward China in January 1950, the future of the island-based
Nationalist Chinese state seemed doomed. Worse still, the severe challenge
Chiang Kai-shek faced was multifaceted. Internally, the surviving Nationalist
authorities on Hainan Island posed a political embarrassment and added a
logistical burden to the trouble-ridden government in Taipei; and the Hainan
Nationalists’ appeal for American support generated much diplomatic
uneasiness to Chiang Kai-shek. The trouble from the Hainan Nationalist
authorities was coupled with rumors and intrigues against Chiang. In the
early months of 1950, a coup to topple Chiang was discussed from time to
time, and also served as an alternative scenario in the State Department’s
“hypothetical” planning before the war broke out in Korea. Externally, U.S.
covert support for the Hong Kong-based anti-Chiang Third Force movement
and the Tokyo-headquartered Taiwan independence movement was
perceived by Taipei, with much apprehension, as undermining its already
weak political legitimacy. As a corollary, to consolidate Nationalist rule in
Taiwan and reestablish Chiang’s supreme position, the KMT national
security apparatus began campaigns of terror to root out communist networks
and sympathizers and to extend the reach of surveillance and cells down to
the grass roots. Those relatively successful campaigns were intended to
stabilize a still-weak accidental state in the island; with them the Chinese
Nationalists began the long process of building political legitimacy among a
population that had every reason to despise the ruling elites.
On the other hand, it was also at this darkest formative moment of
Nationalist rule in Taiwan that an unofficial American and primarily
personalized Nationalist China policy began to take shape and play a crucial
part. With the advisory assistance from the retired former commander of the
Seventh Fleet, Admiral Charles M. Cooke, and his “Special Technician
Program” in Taiwan, Chiang Kai-shek was able to withstand a critical stage
of his political career in the months surrounding the outbreak of the Korean
War. An individually influenced U.S. approach to Nationalist China policy-
planning structure that centered on Charles Cooke and his special program in
Taiwan led to major decisions that culminated in the abandonment of Hainan
and Zhoushan islands, as well as arms contracts and procurements that were
crucial to Taiwan’s security and defense. The retired admiral also served a
vital role in bringing together a deserted Chiang and General Douglas
MacArthur in Tokyo. For a period of time surrounding the outbreak of the
Korean War, the American policy toward the Nationalist authorities on the
islands of Taiwan, Hainan, and Zhoushan was substantially going
underground and considerably privatized. Broadly speaking, this uniquely
informal advisory experience helped to prolong the weakened Nationalist
regime’s survival in Taiwan. However, as this study will demonstrate, in this
critical formative stage of the Republic of China on Taiwan, the U.S.
government may have been playing a two-, three-, or several-sided game
with the Nationalists, involving not just Chiang Kai-shek, but also Chen
Cheng, Sun Liren, K. C. Wu, the anti-Chiang Third Forces, pro-Taiwan
independence elements, and the Nationalist guerrillas on the mainland.
 From the spring of 1949 through June 1950, the United States attempted to
offer the Chinese Communists normalization of bilateral relations and
cooperation as part of using Chinese Titoism to contain Soviet Russia in the
Far East. Mao Zedong was aware of this, but chose instead to form a close
military alliance with Moscow. Leaders in Beijing then worked with the
Soviets and the North Koreans to launch a war to take over South Korea.
These contingent factors all played critical roles in the “accidental”
formation of the Nationalist state in Taiwan. The war on the Korean
Peninsula, undoubtedly the biggest contingency of all, and the subsequent
interposition of the U.S. Seventh Fleet in the Taiwan Strait were the most
critical linchpins for Chiang Kai-shek and his Nationalist cohorts. Their
dispirited and decimated regime was now reinvigorated, while a Nationalist
Chinese state virtually rooted on the islands of Taiwan and the Pescadores
also began to take permanent shape. The Korean War led to a game-changing
contingency that prompted the overnight rethink of the Truman administration
and its about-face on issues surrounding Taiwan. Indeed, although Chiang
Kai-shek continued to be despised, his island regime was saved. In hindsight,
this “game-changer,” which took place surrounding the outbreak of the
Korean War, also made the about-face of the extra-official activity of
Douglas MacArthur, Charles Cooke, and others easier to accomplish.
In the process of this state-making in Taiwan, several issues deserve
careful contemplation. Before the Korean War, Chiang Kai-shek had hoped
for a World War III to bring his dying Nationalist regime back to life. After
the outbreak of war in Korea, and with a more secure island redoubt at hand,
launching a military rollback against the Communist mainland as part of a
new world war became less realistic to Chiang. Instead, he began initiating
party reforms and promoting limited democracy in Taiwan for the sake of
deepening the KMT’s social base and strengthening the legitimacy of its rule
on the island. With Taiwan now at the forefront of the international Cold War,
Chiang’s idea of a military recovery of the mainland served as useful
political rhetoric, both to attract more U.S. aid and to maintain the
Nationalists’ morale and legitimacy on their maritime domain.
The conventional wisdom argues that, after the war broke out in Korea,
Chiang Kai-shek strongly favored a military reinvasion of the Chinese
mainland so as to restore his role in China. The Truman and Eisenhower
presidencies, on the other hand, were inclined to simply contain the Chinese
Communists. A crosscheck of both Chinese and English declassified
documents now reveals that as the Korean War entered a stalemate, it was
actually the military and intelligence chiefs in the Pentagon who took the lead
in transforming the Nationalists’ grandiose but empty “military rollback”
slogan into detailed courses of action for the purpose of U.S. geo-military
interests in the Far East. While Washington urged Taipei to launch a military
counteroffensive against the Communist-controlled territories of Hainan
Island and the Southeast mainland, it was Chiang Kai-shek who now tried to
avoid such an operation so as to keep his military supremacy intact within the
Nationalist hierarchy, in addition to assuring Taiwan’s defense interests. In
other words, in the early 1950s, when the American-favored General Sun
Liren remained a perceived threat, Chiang placed political deliberations
ahead of any other issue, giving priority to the consolidation of his Taiwan
power base without truly thinking about a genuine counterattack on the
mainland to overthrow Mao Zedong. In the eyes of Chiang, mounting
localized and relatively small-scale raids along China’s coast, thus
maintaining the façade of attempts at military recovery of the mainland,
would best suit his interests. Chiang’s reluctance to, if not resistance against
mainland military recovery at the height of the Korean War might have
unwittingly shaped Taiwan’s military as purely defensive in nature, thus
providing a conceptual basis for Washington’s readiness to conclude a
mutual defense pact with Taipei in 1954–1955.
A revitalized U.S. military aid to the Nationalists in Taiwan no doubt
strengthened Chiang Kai-shek’s position in both domestic and international
arenas. Nonetheless, this renewal of aid was coupled with U.S. pressure to
reform Chiang’s military and to transform the hitherto inept Nationalist
military command and decision-making structure into more capable ones.
The result of such a pressure was a substantial reduction of Chiang’s
authority over Taiwan’s military and defense affairs, transforming a
perennially Chiang-centered Nationalist military decision-making into a
virtually U.S.-dominated one. With the Nationalist government’s military
budget and troop deployment being largely subject to U.S. approval by mid-
1953, when the active stage of war on the Korean Peninsular ended, and
when Washington no longer saw the military confrontation with the PRC as
feasible, a Nationalist military power projection capability limited only to
Taiwan and the Pescadores was basically in place.
In the early 1950s, during the nascent period of the Nationalist state in
Taiwan, the signing of two treaties further reinforced both the legality and the
political actuality that the territorial and jurisdictional scope of Nationalist
China was to be confined to the islands of Taiwan and the Pescadores only.
One was the 1952 peace treaty between Taipei and Tokyo, and the other was
the 1954 mutual defense pact between Taipei and Washington. These two
treaties legitimized Nationalist governance on Taiwan, elevated the
international status of the Nationalist government, and made Chiang’s island
redoubts more secure against Communist military threat. On the other hand,
whether the Nationalists liked it or not, the content, spirit, and scope of
application of these two treaties also bore strong implications that would
eventually lead to the legalization of an islands-rooted Nationalist Chinese
state. In retrospect, while Chiang Kai-shek endeavored to legitimize his
Taipei-based regime as the central government representing the whole of
China by entering into more international agreements, ironically, the two
treaties he signed with Japan and the United States only demystified such a
claim.
 As the Korean War came to a halt in the summer of 1953 with the signing
of an armistice, the withdrawal of two exiled Nationalist forces in northern
Burma and Vietnam signified the end of the marked Nationalist military
presence on the East Asian continent. Chiang Kai-shek was deft enough to try
to utilize the two withdrawal operations to seek more U.S. support for other
military ends. Yet the political coloration that the absence of Nationalist
forces on the Asian mainland brought about was not unremarked. Henceforth,
any Nationalist government official statement about or expression of a
hoped-for military return to the Chinese mainland could only prove
increasingly less persuasive.
The realignment between the United States and Taiwan-based Nationalist
China in 1954–1955 was depicted by Chiang Kai-shek as his greatest
achievement since the end of World War II. To the Americans, the official
alliance with the Chinese Nationalist government provided a legal basis for
their acquisition and operation of military bases and installations on
Taiwanese soil. It also led to the disposition of U.S. land, air, and sea forces
on the island, a crucial step forward following the agreements reached in
1951–1952, when the U.S. Military Assistance Advisory Group (MAAG)
was given access to Taiwan’s airfields and port installations on an ad hoc
basis. Accordingly, the 1954 mutual defense pact bore great significance in
terms of America’s military security buildup in the Cold War’s East Asian
theatre.
And yet, for Chiang, reentering a coalition with the Americans was not
without its costs. He could not have been unaware that one key consequence
of such realignment would be stronger U.S. influence, if not control, over his
future military enterprises against the Chinese mainland, and the existence of
two de facto political entities on both sides of the Taiwan Strait. A
politically pragmatic Chiang was also a man with a strong will and a lot of
determination. In the years that followed, he did try to challenge, if not break,
the framework created by the 1954–1955 realignment and contemplated
resorting to military means to recover the mainland, first in the late 1950s
and then again in the early 1960s. Nevertheless, the complicated historical
developments at the formative stage of the Nationalist Chinese state on the
island of Taiwan, as delineated in the this text, had made such a plan
virtually impossible. In this regard, the “patron-client state relationship”
framework is useful in reexamining the bilateral interactions between the two
sides.2 Being a client state, small Taiwan could never guarantee its security
without support and assistance from the United States. When dealing with the
United States, Chiang could be extremely adept at manipulating his American
patrons and, for all intents and purposes, sometimes successful in enlarging
his room for maneuver, even as he chafed against restrictions put in place by
his paymasters in Washington.
Within a relatively short decade, from the mid-1940s to the mid-1950s,
Taiwan was transformed from a Japanese colony to a province of postwar
China, and then from an island frontier to the center and the final power
bastion of the exiled Nationalist Chinese state. The process of making an
island state was intriguing, contingent, inadvertent, full of political bitter-
sweetness, and never intended when the fate of Taiwan and the Pescadores
was first planned in the middle of World War II. In hindsight, perhaps a more
striking fact was that the United States, from the government organization
down to various individuals, with their policy planning and theorizing,
actions and inactions, had played a crucial role in the formative years of this
state.
This book explores the creation of an accidental island state of Taiwan,
with special emphasis on the roles the Chinese Nationalists and the
Americans played. To be sure, the actions and inactions, successes and
failures of the third party—the CCP/PRC—are no less consequential in the
making of this unintended state and deserve future study. With the further
release of declassified U.S. official records and accessibility of the personal
papers and files of top Nationalist leaders during the past decade, a
reevaluation of the formation of the Nationalist Chinese state in Taiwan, with
an emphasis on the unique role the United States played, is not only possible
but necessary, particularly when, in recent years, a school of thought has
begun to argue that the United States should “abandon” Taiwan in return for a
better relationship with the PRC.3 A thorough investigation of the historical
formation of the separate ROC state on Taiwan and the roles the Americans
played in this state formation will help us see the “abandoning Taiwan”
thesis more clearly. It is my hope that this book will provide a first step
toward understanding the history of a complicated and intricate triangular
game, the repercussions of which continue to be felt today.
 1
Taiwan in the Balance

DURING THE FIRST DAYS of November 1943, Chiang Kai-shek was hard
pressed to prepare for an important event unprecedented in China’s recent
history. On October 31, in the midst of his long war with Japan, he received
a cordial invitation from U.S. President Franklin D. Roosevelt to partake in a
summit that was to be held in Cairo within a month. Chiang was fully aware
of the enormous historical significance of representing Nationalist China,
now recognized as one of the Big Four powers1 in the world, to meet with
top leaders from the United States and Britain. Chiang, who should have been
much elated and excited, nevertheless confessed that the forthcoming summit
had made him feel rather “hesitant and uneasy.”2 In the weeks that followed
the invitation, Chiang and his top aides were hastily forging the agenda to be
discussed with their Allied counterparts. This was no easy task. On the
morning of November 18, 1943, just a few hours before his special flight
was about to take off from Chongqing, Nationalist China’s wartime capital,
Chiang finalized a list of seven outstanding issues to be broached in Cairo.
The restoration of China’s various “lost territories” was one of them; and
with much deliberation, it was determined that the return of two territories
from the Japanese, Manchuria and Taiwan (including the Pescadores), should
be presented at the conference table.3
For the Nationalist Chinese, adding Taiwan to their “lost territories”
category awaiting restoration was a long and evolving process, entangled in
both political calculation and uncertainty. From a real political perspective,
up to the attack on Pearl Harbor in December 1941, Nationalist officials had
not considered Taiwan to be in the same category as other mainland
territories lost to Japan in more recent years, notably Manchuria. The island
had been officially ceded by the Qing imperial court to Tokyo in the 1895
Treaty of Shimonoseki after China’s defeat in the war with Japan. In contrast,
Japan’s conquest of Manchuria and its subsequent sponsorship of the puppet
“Manchukuo” regime in the early 1930s had never resulted in Nationalist
China’s relinquishing its claim of sovereignty there. Along with its formal
declaration of war on Japan after Pearl Harbor, the Nationalist government
nullified all treaties between the two countries. Only then did Chiang Kai-
shek and his associates formally and publicly include the recovery of Taiwan
in their war aims.4
Regarding Taiwan’s relations with the Chinese mainland, it should be
noted that Chiang Kai-shek had harbored shifting perceptions and mindsets at
different stages of his political career. His ever-changing attitudes toward the
island-mainland relationship, to a considerable extent, also reflected how
other top Nationalist government leaders perceived the issue. In October
1921, while still a young revolutionary struggling for the very survival of the
KMT power base in southern China, Chiang stepped onto the soil of Taiwan
for the very first time. Having conducted a business trip to Guangzhou
(Canton), where he met his mentor Sun Yat-sen, Chiang set out for Shanghai
via the sea route. While taking a short transit break in Keelung, the island’s
northernmost port, Chiang observed that the port was ill-managed and the
staff poorly disciplined, which led him to note in his diary that “the fate of
imperial Japan is doomed.”5
Chiang’s preliminary, negative impression of Japan’s colonial rule over
Taiwan was not, however, coupled with any indication that he was thinking
about the island’s return, whether immediately or in the future, to the Chinese
motherland. By the spring of 1927, the Northern Expedition under Chiang’s
leadership was under way. On March 11, in his field headquarters in
Nanchang, Chiang hosted a private meeting with an unusual visitor from
Japan, Yamamoto Jotaro, the personal envoy of Tanaka Giichi, a heavyweight
politician who would become Japan’s new prime minister within a few
weeks. Exchanging viewpoints about the future of East Asia, Chiang advised
his Japanese guest that in order to build a lasting friendship between China
and Japan, both Korea and Taiwan should be free from colonial rule. If
Tokyo was willing to assist the Koreans and the Formosans in achieving their
national liberation, Chiang stated, it would fully demonstrate Japan’s
goodwill and friendship toward its East Asian neighbors.6
The “lost territories” depicted in Sun Yat-sen’s notable 1924 Three
People’s Principles included all or parts of Korea, Vietnam, Burma, the
Ryukyu Islands, Bhutan, Nepal, Taiwan, and the Pescadores. Always
claiming to be Sun’s faithful follower, Chiang would no doubt keep his
mentor’s words as his personal goal.7 On various occasions, Chiang
unhesitatingly made known to the outside world that his government and party
would endeavor to restore the territories China had previously lost to the
imperialist powers, a political and rhetorical message that had almost
become a cliché. Nevertheless, throughout most of the 1920s and the 1930s,
no leader of the Chinese central government, whether located in Peking or,
after 1928, in Nanjing, made any serious effort to claim that Taiwan was a
legal part of Republican China. When Chinese constitutions were drafted in
1923, 1925, 1934, and 1936, recognizing practical realities, Taiwan was
never claimed as a province or even a special region of China.8
Before the attack on Pearl Harbor, indeed, the Nationalist government
acted in a manner consistent with viewing Taiwan as a foreign-ruled
territory. In 1929, following negotiations with the Japanese government, the
nascent Nationalist regime in Nanjing agreed to open a consular post in
Taipei under the jurisdiction of its legation in Tokyo. In April 1931, when the
Chinese Consulate General was officially established in Taipei, Lin
Shaonan, a close associate of Chiang Kai-shek, was made Nationalist
China’s first consul general on the island. The consular post operated well
for several years. It was not until February 1938, seven months after the
Marco Polo Bridge incident, that the Nationalist consular staff was forced to
leave the island.9
The Japanese all-out invasion of China in the summer of 1937 brought no
immediate change in the Nationalist attitude toward Taiwan. When
addressing his party cadets in April 1938, shortly after the Nationalist
Consulate General was shut down in Taipei, Chiang Kai-shek argued from a
pragmatic and strategic perspective that his government should endeavor to
defy Japanese colonial rule of Korea and Taiwan and to set free the peoples
of the two territories so as to consolidate war-threatened Nationalist China’s
defense line against Japan’s military encroachments. However, Chiang did
not call for Taiwan’s return to China. Nor did he mention how the
Nationalists should define or redefine their relations with these two Japanese
colonies after their political liberation from Tokyo.10
As China’s war with Japan continued, more and more Taiwanese staked
their future with the Nationalist Chinese in political and military terms.
Beginning in late 1938, the islanders who had fled to the mainland, later
known as “half-mountain people” (banshan ren), and their sporadic anti-
Japanese organizations had gradually come together to formally establish the
Taiwan Revolutionary League (Taiwan Geming Tongmenghui) in February
1941. Earlier, in September 1940, the Taiwan Party Headquarters
Preparatory Office had also been established under the supervision of the
KMT Central Organization Department, thus marking the beginning of the
Nationalist official connection with the Taiwanese. In a meeting held in
March 1942, members of the Taiwan Revolutionary League discussed the
formation of a Taiwanese army, establishment of a Taiwan provincial
government under the KMT aegis, and support for China’s repossession of
the island. Shortly afterward, an editorial published in Yishibao (Social
Welfare), a Chongqing newspaper, advocated that “the Chinese government
should make a fresh declaration of its claim of sovereignty over the island
removing from the minds of other nations the conception of Formosa as a
colony, and encouraging the Formosans themselves to redouble their efforts
against the enemy.” American diplomats surmised that the league had begun
agitating for Taiwan’s return to China because of public discussion of
independence for Korea, which Chongqing had previously viewed on a par
with Taiwan.11
Nonetheless, top Nationalist echelons moved cautiously with regard to the
Taiwan issue. In April 1943, the aforementioned Taiwan Party Headquarters
Preparatory Office was expanded into a “KMT Centrally Administered
Taiwan Executive Committee” when Chiang Kai-shek found it imperative to
create a political mechanism to accommodate more “half-mountain
people.”12 Although it was always directly attached to the KMT Central
Party Headquarters, as were KMT’s provincial party headquarters
elsewhere, the term “province” never appeared in any pre-recovery name of
the Taiwan Party Headquarters. Nor had Chiang expressed his consent to the
idea of creating a Taiwan provincial government-in-exile on the mainland, as
proposed by some pro-Nationalist Taiwanese elites in China. As of mid-
1942, planning-level officials within the Nationalist hierarchy remained
cautious, if not uncertain, about Taiwan’s return to China.13 Both U.S.
military intelligence analysis in the early 1940s and contemporary
researchers have argued that at this juncture Japanese colonial Taiwan’s
future relations with China were quite murky. It remained undetermined
whether the island would become a province of China, or a special district
under Chinese or Allied control following Japan’s surrender.14
As the summit in Cairo neared in November 1943, understandably, Chiang
Kai-shek and his top aides found it imperative to work out a clear definition
of China’s territories “lost” to the Japanese. At this juncture, geostrategic
concerns came to dominate top Nationalist leaders’ attitude toward this
issue.15 Just half a year prior to the Cairo Conference, Chiang published
China’s Destiny, in which he drew an idealized picture of postwar China’s
territorial and defense landscape. According to Chiang, China’s peripheral
areas, including Manchuria, Taiwan, the Ryukyu Islands, Mongolia, Xinjiang,
Tibet, and even the remotest Pamir and Himalayan regions, were all
“strategically essential” for the country’s postwar national defense.16
Chiang’s grand statements, dealing with such sensitive subjects as China’s
likely territorial expansion, momentarily invited both mixed reaction and
speculation from abroad. While the British were apprehensive about
Chiang’s professed ambitions toward Tibet and adjacent territories under the
British Raj, the Americans seemed comparatively relieved. President
Roosevelt, for example, was more than pleased to have the Ryukyu Islands
return to postwar China, an idea he had advanced to the Nationalists in
1942.17 As the summit became imminent, however, Chiang was at least
perspicacious enough to differentiate idealism from realpolitik when dealing
with international affairs. To persuade the other Allied leaders that it was in
their best interest to support China’s territorial restoration after V-J Day,
Chiang needed to place pragmatic considerations at the forefront.
Legally speaking, the Ryukyu Islands, a quasi-independent kingdom paying
tribute to the Qing imperial court, had never been a formal part of China.
Whereas the Qing lost Taiwan and the Pescadores as a result of its war with
Japan in 1894–1895, it had lost its tributary patronage over the Ryukyu
Islands through an ambiguous and gradual process. In 1879, Tokyo officially
made the islands into its “Okinawa Prefecture,” thus marking the end of the
kingdom’s tributary ties with China. The defeat of Qing by the Japanese in
1894–1895 further dimmed all possible hope of the islands’ return to China’s
jurisdiction, even nominally.18
If “legality” and “historical legitimacy” were concerns that might have
discouraged Chiang from accepting Roosevelt’s goodwill and claiming the
Ryukyu Islands back, pragmatism and realism, especially the consideration of
war-torn China’s physical strengths in East Asia, played the most decisive
part in determining the islands’ future. As Chiang Kai-shek argued on a later
occasion after the Cairo summit, Nationalist China would continue to be in a
very difficult position to govern Ryukyu even if the islands were returned to
its territorial sway, due to a serious lack of naval capability in the
foreseeable decades.19 Considering the fact that both Ryukyu and Korea were
once imperial China’s tributaries rather than innately integrated parts of the
empire, Chiang at the last minute decided to remove both territories from the
list to be discussed in Cairo, thus leaving Manchuria and Taiwan as the
Nationalists’ main targets to be reclaimed with the support of their Allies.20
 EARLY U.S. PERCEPTIONS OF TAIWAN

The Cairo summit, as it turned out, was a huge propaganda success for
Chiang Kai-shek and his war-torn Nationalist regime, as well as a morale
booster to the Chinese nation as a whole. The press communiqué issued on
the last day of the summit, commonly known as the Cairo Declaration, stated
that both President Roosevelt and British Prime Minister Winston Churchill
concurred that “all the territories Japan has stolen from the Chinese, such as
Manchuria, Formosa, and the Pescadores, shall be restored to the Republic
of China.”21 Back in Chongqing, the Chinese mass media viewed the summit
as a great success, both in dealing with territorial issues and in strengthening
Allied common war efforts against Japan until the latter’s unconditional
surrender. The American embassy in Chongqing observed that the Chinese
officials and people were greatly inspired, and were now “holding in high
esteem the farsightedness of President Roosevelt and Mr. Churchill.”22
Both the Chinese officials and the people surely had reasons to celebrate
Allied support of China’s “lost territories” issue. Just a year before, in
August 1942, a committee of editors of Time, Life, and Fortune published a
memorandum entitled “The United States in a New World, II: Pacific
Relations.” Regarding the structure of a new peace order in the postwar
Pacific region, a section of this article was devoted to “a trans-Pacific
highway.” The authors proposed that a U.S.-United Nations defense belt be
built across the Pacific, beginning with Hawaii in the east and ending with
Taiwan in the west as “the logical anchor of the line and the mighty western
terminus for the air armadas of the United Nations.” Under this new
dispensation, they argued, China could have predominant interest in Taiwan,
where the Chinese customs service and currency system could be introduced
into the island. “But,” the authors argued, to make Taiwan a Chinese territory
“seems impolitic in view of the necessity for a United Nations base there.”23
Readers in war-beleaguered China had been shocked and astonished that
certain of their influential American friends argued for some sort of a United
Nations mandate under which the Chinese population of the island would
enjoy full autonomy and civil rights, but with foreign affairs, military forces,
and security measures of the island controlled by the postwar UN
authorities.24
Despite a somewhat different stance toward Taiwan on the part of the
Nationalist government, the article ignited strong Chinese reaction. It was
probably this article that pushed the Nationalists to become more
forthcoming in their official intentions. In October 1942, in a private meeting
with Wendell Willkie, President Roosevelt’s special envoy, Chiang Kai-shek
told the American visitor that Taiwan, together with China’s coastal
fortresses like Lushun and Dalian (Port Arthur), must be returned to China
after the war.25 A month later, on November 3, 1942, in his first press
conference since becoming Chinese foreign minister, T. V. Soong firmly told
a group of foreign and domestic correspondents that China “will recover
Manchuria, Formosa, and the Ryukyu Islands after the war.”26 Shortly
thereafter, on New Year’s Day 1943, Sun Fo, Sun Yat-sen’s son and then
president of the Legislative Yuan, published an article in the KMT official
organ, Central Daily, attacking the Time-Life-Fortune memorandum for
“ignoring China’s determination to recover Taiwan.”27 Sun’s statement was
followed the very next day by an article written by Shao Yulin, director of
the Information Department of the Foreign Ministry, published in the
influential Da Gong Bao (The Impartial Daily) and in Central News Agency
dispatches. Shao expressed his astonishment that anyone should place the
issue of security above the principle of self-government. He asserted that
China’s allies should not expect its cooperation on matters of international
security unless Chinese sovereignty over the lost territories was
unconditionally restored.28
These strong reactions prodded Washington to clear the air with
Nationalist high officials. In a meeting with T. V. Soong in March 1943,
Under Secretary of State Sumner Welles stressed that “the Chinese, the
British and the Americans were very much in accord” concerning the steps to
be taken in the Far East after the war was won. Welles particularly assured
Soong that Formosa must be returned to China, and that Chinese sovereignty
should once more be reestablished over Manchuria.29 Although the
Nationalists had secured Washington’s promise that Taiwan would be
returned to China, differing voices arguing for Taiwan’s postwar
internationalization and U.S. special interests on the island persisted. A
memorandum issued by the U.S. Office of War Information in mid-1942
emphasized that Taiwan had long been a natural and strategic springboard for
Japan’s program of conquest. More saliently, as Washington’s military and
intelligence chiefs noted, there had been a large increase in electric power
and war manufacturing on the island, which might be of considerable
strategic value to the United States.30 In his response to inquiries from the
Chinese mass media about Taiwan’s future status, John K. Jessup, a special
advisor to Fortune magazine, still insisted that Taiwan’s internationalization
was the best way to stabilize and revive a struggling, postwar Far East.
Jessup’s incendiary argument, translated and circulated in Chongqing, did
nothing but intensify the cross-Pacific debates over the island’s future in the
postwar era.31
George H. Kerr’s ideas about Taiwan represented yet another example of
how an amorphous and somewhat “politically incorrect” concept about the
island’s political future was gaining currency in the United States during
wartime. Born in Pennsylvania, Kerr was a student in Japan from 1935
through 1937, after which he went to Taiwan and became a teacher of
English language in Taipei until 1940. Given his personal experience in
Japan and colonial Taiwan, Kerr became a Taiwan expert in the navy after he
returned to the United States to serve as a lieutenant in the navy reserves.32
In early 1942, while working as an analyst and consultant on Taiwan in
the War Department, Kerr drafted a memorandum that explored possible
alternatives for the island after the war, advocating some form of
international control; the creation of a security base on the island in the south;
and the use of Taiwan’s abundant agricultural, forestry, and water resources
in a postwar reconstruction program. The draft was developed into an
official memorandum in July, when the chief of the Far Eastern Division of
the Military Intelligence Service was asked to state the division’s views
about Taiwan’s occupation as part of a general strategy. In the memorandum,
Kerr suggested that China would not be able to assume exclusive control of
Taiwan for two reasons: There were not enough Chinese administrators and
technicians available to manage the island’s complex economy, and there
were ever-present dangers of intolerable exploitation by Nationalist political
leaders, army, and party cliques, “who were a curse to China.”33 It was
evident to Kerr that Taiwan was many years more advanced than the Chinese
mainland in terms of technological organization, as well as in its general
standard of living. As Kerr saw it, the Nationalist government had “no
surplus of trained manpower to spare for the job” which would have to be
carried out in Taiwan.34
The timing of this memorandum, in retrospect, is intriguing. It came at
almost the same time as the “trans-Pacific highway” concept appeared in
Fortune. Despite Sumner Welles’s assurances to T. V. Soong regarding
Taiwan, behind-the-scenes discussions on the island’s future status persisted
within the U.S. military intelligence establishment until October 1944. To
cite Kerr’s own account, three alternatives were brewing in these
discussions. First of all, theoretically Taiwan might be made independent and
given self-government, but in practice this would be difficult to bring about,
even if the Taiwanese wanted it and the Allied nations all agreed. A second
course would ensure the prompt transfer of the island to China. A third
program would provide for a temporary Allied trusteeship, during which the
islanders themselves would prepare for a plebiscite to determine their
ultimate political fate.35 This “trusteeship” notion, as it turned out, would
provide a crucial theoretical framework for Taiwan’s early independence
movement in the postwar years.
 GOING REALISTIC

The Potsdam Proclamation, signed in July 1945 by leaders of the United

States and Britain with the concurrence of Nationalist China and
subsequently agreed to by the Soviet Union, stated that the terms of the Cairo
Declaration were to be carried out. This meant that the promised return of
Taiwan to postwar China would be honored by the Allies. The issuance of
these declarations did not hamper the ongoing U.S. war and strategic
planning in the Pacific theater. Nor did such a diplomatic gesture play a
crucial role in modifying U.S. military operations against the Japanese
facilities in Taiwan, or in slowing draft plans for U.S. military occupation of
the island as a first step toward an all-out invasion of Japan proper.36 More
realistically, despite an Allied concurrence regarding restoring China’s
sovereignty in the “lost” territories, the issue was how to define Taiwan
sovereignty. For example, while President Roosevelt agreed that Manchuria
should be returned to the Chinese, he also spoke of a “free zone” for solving
a likely Chinese-Soviet dispute there after the war.37 On Taiwan, from the
Cairo Declaration until the Japanese surrender in the summer of 1945,
questions had never ceased to be raised among Washington’s top strategists
regarding Allied operational planning for the initial postwar treatment of that
island. For instance, what would be the legal status of the island between the
time of a Japanese surrender and the formalizing of a Japanese transfer of it
to China under a peace treaty? If Taiwan were handed over to China for
administrative purposes, would it become sovereign at the same time? The
general thinking was that, by signing the Instrument of Surrender, Japan
would relinquish sovereignty over the island and the Chinese would
reoccupy Taiwan and assume an interim administrative authority. It was
reckoned, however, that Chiang Kai-shek’s forces did not have the requisite
shipping capability to ferry needed personnel over to the island to assume
administrative functions, to say nothing of the military strength that would be
needed if armed resistance were encountered. It was obvious that the
Nationalist government would need American assistance to effect a
successful reoccupation.38
Based on the above rationale, a majority in Washington’s military
intelligence circles were convinced that U.S. military operations to assist the
Chinese reoccupation of Taiwan should be under an American theater
commander, who would be responsible for the establishment and the conduct
of the military administration of civil affairs there. Moreover, it was
contemplated that such an administration would continue, pending the
regularization by treaty of the future status of Taiwan.39 On the other hand, for
the State Department bureaucrats, one important geo-strategic issue to be
resolved was whether Taiwan would be returned to China with the
understanding that “a base or bases” would be given to the United States, and
whether it would be for exclusive American use or be operated jointly with
China or collectively with other allied nations. Whatever the solution, a
general consensus within the State Department was that the question of
military bases should be kept entirely separate from the transfer of
sovereignty, and that any effort to seek rights for bases “for general
international security purposes” should be considered after Taiwan was fully
restored to Chinese sovereignty.40
In the meantime, key officials in the U.S. naval establishment strongly felt
that Washington should continue exercising authority as a military occupying
force pending the formal assumption of Chinese sovereignty. Along with this
rationale, there were some practical questions as to whether the occupation
of Taiwan, if carried out, should be an army or a navy responsibility.
Eventually, by common consent, the navy accepted the task of preparing for
such an undertaking.41 The decision was made despite the fact that there was
little precedent for a naval occupation of land.
In fact, in December 1943, shortly after the Cairo Declaration, training of
personnel for the prospective U.S. military government on Taiwan, dubbed
“Island X” in related documents, had been secretly launched at Columbia
University, New York. A “Formosa Unit,” of which George Kerr was a
member, was set up there and began operating in preparation for a possible
American occupation and administration of the island.42 The preparation for
the island’s administrative takeover was accompanied by military
operational planning. In February 1944, three months after the United States
launched its first bombardment of Taipei, an intelligence report
commissioned by the Office of the Assistant Chief of Air Staff, G-2,
relentlessly detailed more bombing targets on the island. It specified that
harbor facilities and shipping concentrations in Keelung and Takao
(Kaohsiung), the two largest port cities in the north and south of the island,
and the railroad facilities between Keelung and Taipei, and between Tainan
and Kaohsiung, were the priority targets for bombing and air strikes. Other
main objectives for Allied operations on the island included the electric
power station of Jitsugetsutan (Sun Moon Lake) in central Taiwan,
Matsuyama (Songshan) Airport in Taipei, and other industrial infrastructure
in Kaohsiung, Hualian, and the large Taichung district.43 These bombardment
plans were carried out in November 1944, and again during the first months
of 1945, causing enormous damage to the Japanese colonizers as well as to
the people of the island.
By the spring of 1944, while Allied bombing of Taiwan continued
incessantly, recommendations regarding U.S. policy toward Taiwan were
finalized by the planning-level “Country and Area Committee” within the
State Department, together with Washington’s military and intelligence
establishments. Both Taiwan and Japanese-controlled Hainan Island off
Guangdong province were given significant strategic attention by the
personnel of the New York-based “Formosa Unit.”44 While the planning staff
strongly suggested Allied military operation and occupation be taken in
Taiwan, curiously enough, no similar suggestions were proposed about
Hainan at this stage.45 Noticeably, the role of Chiang Kai-shek and his
government were largely marginalized in this operational planning. It was
thought that to occupy Taiwan after V-J Day, Chinese cooperation in the
military government on the island would be helpful and in time would tend to
facilitate a smooth handover to China. Nevertheless, considering U.S.
postwar overall interest in the Far East, it was also recommended that, while
the participation of the Chinese Nationalists as individuals and in an
advisory capacity would be welcomed, Washington should not invite
Chongqing to partake in this interim administration. Rather, as the planning-
level staff posited, decisions on the extent to which Chinese personnel would
be included in the administration would have to depend on the extent of the
Chinese participation in the military operations for the occupation of
Taiwan.46
 THE TAIWAN VERSUS LUZON DEBATE

No immediate action or top-level decision was undertaken on the in-house

recommendations, which were laid aside to await developments in the
military situation in the Pacific theatre. In March 1944, General Douglas
MacArthur, supreme commander of the Southwest Pacific area, was directed
to prepare for an invasion of the southern Philippines, with February 1945 as
a target date for Luzon. Meanwhile, Taiwan would be invaded at the same
time, a project that was coded “Causeway Operation.” Around mid-June, the
Joint Chiefs of Staff questioned the feasibility of the Luzon attack, while
MacArthur, doubtlessly remembering his “I shall return” pledge during the
retreat from Corregidor, firmly held that attacking Luzon was essential before
military forces could move against Japan. His reasoning was both moral and
strategic: American prestige was dependent on its promised return to the
Philippines, and Taiwan’s heavy fortifications and its distance from adequate
logistical support made an assault on the island particularly hazardous.47
While the Taiwan plan was primarily a naval operation, differences of
opinion did not necessarily form along service lines, but rather between
Washington strategists and Pacific commanders.
By early July 1944, MacArthur began to clash directly with Admiral
Chester Nimitz, commander in chief of the Pacific Fleet, who strongly
favored the Causeway Operation but with somewhat less tenacity than
MacArthur defended the Luzon plan. While Nimitz conceded the importance
of land-based air support, such as Luzon would provide for an assault against
Taiwan, he maintained the navy’s view that “neutralization” of the Japanese
air force there from the southern Philippines, along with naval supremacy in
that area, might effectuate the seizure of Taiwan. On the question of whether
Taiwan or Luzon should be captured first, Nimitz wavered, believing that
future developments would determine which would be more desirable.48
 No final strategic decision was made in Washington, as the debate over
whether to seize Taiwan or Luzon continued for another three months.49
During the summer, Nimitz and his cohorts paid great attention to a naval
plan for the seizure of only the southern tip of Taiwan and a simultaneous
assault against the Chinese coastal port of Amoy in Fujian province. The
strategic importance of Amoy was to channel supplies to Allied bases in
Central and East China from which bombing missions could be carried out
against Japan. However, the war conditions in the China theater in mid-1944
had a pronounced influence on the proposed U.S. invasion of Taiwan. The
successive loss of airfields in Southeast China to the Japanese since July
1944 indicated that a U.S. landing on Taiwan or on the China coast would be
difficult. Consequently, invading Taiwan became less urgent. By September,
as most of Southeast China fell into Japanese hands as a result of Operation
Ichigo, the island itself now had little to offer in the way of logistical naval
bases that could play a role in dealing with the Japanese-occupied
mainland.50
As evidence mounted against the feasibility of assaulting Taiwan, navy
planners, including Admiral Nimitz himself, proposed bypassing it and
proceeding northward, thus bringing the navy more in accord with
MacArthur’s sentiments. It was these military considerations that finally
persuaded the Joint Chiefs of Staff to retreat from the Taiwan plan. Hence, on
October 3, 1944, orders were issued to MacArthur to proceed to Luzon.
Nimitz was then instructed to prepare for operations against Okinawa.51 The
military plan for the conquest of Taiwan was never formally cancelled, but
simply left by the wayside due to exigencies of the war.52 Significantly, the
likelihood of Allied military operations to capture Taiwan forced the
panicked Japanese colonial rulers on the island to allow more Formosans to
take part in domestic affairs, and to announce the recognition by law of equal
treatment of and rights for the Formosans as compared to the Japanese. These
moves, as Washington’s intelligence chiefs perceived, were made to boost
the Formosan morale and to strengthen the island’s defense spirit against the
Allies.53 In hindsight, these moves also became part of what created a
distinct Taiwan history and, to some degree, a distinct identity that would
later play a role in Taiwan’s postwar politics.
In June 1945, when the geostrategic value of Taiwan as a staging area for
the final assault on Japan gradually diminished after the Americans captured
Okinawa, diplomatic and political issues surrounding Taiwan’s future
administrative arrangement resurfaced. According to Joseph W. Ballantine,
director of the Office of Far Eastern Affairs in the State Department at the
time, by early 1945, when the Taiwan plan was fading away, President
Roosevelt made up his mind that China was to be given “unconditional”
possession of Taiwan should Japan surrender.54 The unequivocal insistence
by Chinese Communist leaders, such as Mao Zedong and Zhou Enlai, on
Japan’s unconditional return of Taiwan and Manchuria to postwar China
might also have played a part in determining Washington’s position on this
issue.55
Notably, with the smooth capture of Okinawa, U.S. military hardliners
gradually began to shift their views about an American military occupation of
Taiwan. Earlier, in March 1945, a top secret State-Army-Navy Coordinating
Committee policy paper still recommended a careful discussion of the
advisability of the U.S. armed forces establishing a military administration
for civil affairs in Taiwan, and maintaining it until arrangements were made
for the restoration of Chinese sovereignty. A prompt analysis of the extent
and conditions of participation in the civil affairs administration by the
Nationalist government was also favored.56 Because the Japanese might still
organize their proposed defense system “area-by-area” and because
continued resistance in separate regions of Japan would be likely in the final
stage of the war, the American concept of a “military” postwar local and
regional administration in the Japanese-occupied areas gained importance.57
In the meantime, both civil and military officials in Washington cautiously
urged a careful study of such details as the possible effects of a transfer of
Taiwan to China; the authority and responsibility to be exercised by the
proposed military government in the island’s civil affairs; and the problems
that the civil affairs authorities would encounter vis-à-vis the Chinese
Nationalists.58 They particularly foresaw issues regarding how to best deal
with the tremendously lucrative Japanese properties on the island. As
originally planned by the Coordinating Committee, the United States would
play a substantial role in setting up basic rules of international law pertaining
to the treatment of public assets and private property; in facilitating an early
integration of Taiwan’s economy with that of China; and in supervising “the
use of Chinese and Formosan Chinese in the operation of Japanese
enterprises on the island.”59
However, things changed dramatically after the capture of Okinawa in
June 1945, when Taiwan’s takeover increasingly became a side issue. Now
the consensus in Washington was that only if the island were taken by U.S.
forces in the course of combat operations would it be necessary to establish
a military government there, and that in such an event, Taiwan should be
turned over to the Chinese as soon as this could be arranged without awaiting
the formalization by treaty of Chinese sovereignty over the island.60 It was
also envisaged that, although some operational plans for secret intelligence
penetration of Taiwan might be necessary, if an American military
government was not established in consequence of combat operations, the
island should be occupied and administered by the Nationalist Chinese from
the outset.61 One week after the Japanese surrendered on August 15, 1945,
the aforementioned policy papers and action recommendations were
rendered moot as, according to Washington, the situation had “been overtaken
by events.”62
This change of stance, wrought by the State-War-Navy Coordinating
Committee, proved decisive; before World War II came to an end, some
American officials had envisioned or toyed with the idea of some sort of
institutional and legal arrangement that would separate Taiwan from the
administrative system to be restored on the China mainland. In the end,
because of the exigencies and unpredicted factors, the U.S. government
embraced a swift takeover of Taiwan by the state organ of Nationalist China.
As Taiwan was no longer needed by the Americans to prosecute war with
Japan, tides of war in the Pacific would determine Taiwan’s fate as an
accidental state. More specifically, the withdrawal of a powerful American
involvement in the occupation of Taiwan, including the U.S. role in the
takeover and management of the assets left by the Japanese colonial rulers,
brought about serious consequences during the Nationalist administration on
the island that would become discernable in the following years.
 DEFINING ISLAND-MAINLAND RELATIONS

To the United States, as shown above, the final decision not to invade
Japanese-held Taiwan and govern the island after V-J Day largely resulted
from pragmatic military and strategic concerns. Moreover, Nationalist China
under Chiang Kai-shek was not only a close ally of the United States against
the Axis powers, but the only Allied claimant to Taiwan during World War II.
Washington’s decision therefore was reasonably welcomed and deemed in
good faith by the Nationalists. Behind the scenes, however, top Nationalist
Chinese leaders’ true intentions toward Taiwan deserve a second look.
The positive effect of the Cairo Summit on political propaganda, national
morale, and regime prestige was surely one important factor prompting
Chiang to bring Taiwan into China’s postwar territorial planning. In
Chongqing, local mass media brooked no delay in reporting how the anti-
Japanese Formosan elites on the Chinese mainland were inspired by the
Cairo Declaration, and how grateful they were to the marvelous job the
Nationalist government had done.63 Underneath the glamorous political
publicity about Taiwan’s return to the motherland, Chiang had a larger
picture in mind. He no doubt cast his eyes on the rich colonial resources on
the island. With Taiwan’s retrocession now guaranteed by the Allies, his
regime felt justified in taking over the island’s rich war materiel, assets,
properties, enterprises, and infrastructure, whether publicly run or privately
owned, as legal compensation from a defeated Japan for China’s war
damage. Strategically, given China’s limited naval capability, using Taiwan
as an ideal maritime base for joint naval cooperation between China and the
United States would also serve as a very attractive postwar military
disposition.64
This rosy picture, however, did not guarantee comfortable or smooth
policy planning for the island’s future governance. In April 1944, the Taiwan
Investigation Committee under the ministerial-level Central Planning Bureau
was formed in Chongqing, and Chiang Kai-shek named Chen Yi, former
governor of Fujian province, to head the committee. The appointment was
significant, as it implied that Chen would very likely become the future
governor of the island after its recovery. The reasons why Chiang chose Chen
merit our attention here. Chen shared a similar background with Chiang: both
were natives of Zhejiang Province; both had attended military school in
Japan; both were alleged to have Japanese mistresses; and both had been
associated with the Shanghai underworld.65 From a political point of view,
during wartime the Central Planning Bureau was under the control of the
Political Science Clique (Zheng Xue Xi), one of the largest cliques within
the KMT party. Because the bureau was mainly responsible for planning
postwar China’s territorial and administrative takeover operations, the
Political Science Clique was in a favorable position to create its own
postwar power base. This fact was not difficult to discern: Xiong Shihui and
Chang Kia-ngau, two powerful figures within the clique, were entrusted to
take over Manchuria, while Taiwan was made a satrapy of Chen Yi, another
core member of the clique.66
Pragmatically speaking, for over seven years Chen Yi had served as
governor of Fujian, a province directly across the strait from Taiwan and the
most important Allied base of intelligence and infiltration operations during
the war. As one U.S. military intelligence report depicted, in the midst of the
war Fujian served as both a useful site for Allied radio and pirate control
stations, and an ideal base for anti-Japanese raids and smuggling into
Southeast China.67 The geographical proximity between Fujian and Taiwan
placed Chen in the best position among his fellow Nationalists to get
firsthand information about the island. Before China’s war with Japan, Chen
was one of the very few from the Nationalist hierarchy to have personal
experience in colonial Taiwan. In 1935, Chen was invited as an honored
guest of the Japanese colonial authorities in Taipei, where he attended the
ceremonies and the Taiwan Fair celebrating the fortieth anniversary of
Japanese rule over the island. Chen’s visit extended as far as Taichung,
Tainan, Kaohsiung, and Sun Moon Lake in the central island. Deeply
impressed by the infrastructural and societal progress of the island, Chen
publicly congratulated the Formosans on their “fortunate position.” After
returning to Fujian, Chen submitted a detailed survey report to Chiang Kai-
shek, in which he proposed that Taiwan’s economic development models
should be applied to Fujian and other coastal provinces in Southeast China.68
Chen’s knowledge about, and experience in Taiwan were sufficient to
convince top Nationalist leaders that he was not only an old Japan hand, but
also a new Taiwan hand.
From the Nationalist government’s standpoint, handling postwar Taiwan
affairs required political sophistication as well. The Taiwan Investigation
Committee under Chen Yi included both mainland Chinese officials and a
group of Taiwanese leaders who had a history with the KMT. Cooperation
with these “half-mountain” elites, who were expected to serve as an
important bridge between the island and the central government, became a
key facet of Nationalist China’s postwar planning on Taiwan.69 However,
when it came to such fundamental issues as Taiwan’s relations with mainland
China after the war, reaching a consensus within the committee was not
always easy. Right from the outset, the committee members had been
struggling to define the island’s future political structure. In general,
Nationalist bureaucracy mainlanders tended to regard Taiwan as a newly
restored oceanic frontier that needed to be administered differently from
provinces on the mainland. Given the island’s colonial experience, this group
favored a specialized postwar status for Taiwan, believing that the island
should not be treated as a regular province nor as a frontier region like
Xinjiang or Mongolia. They argued that Taiwan’s exceptional status was
necessary given the political uncertainties Japan’s surrender might bring
about. In other words, there might be an American military operation on
Taiwan leading up to V-J Day, and the island might be regulated under an
Allied military government, preferably run by the Chinese Nationalists, for a
transitional period. Under such circumstances, it was unlikely that the island
could become a normal province.70
Wartime planning for training new government bureaucrats to be sent to
Taiwan to manage the island’s postwar administration clearly showed how
the Nationalist high authorities initially perceived the island’s status vis-à-
vis China. In response to Chen Yi’s question about launching an urgently
needed personnel training program for postwar Taiwan, Chen Lifu, then
Nationalist minister of education and leader of the influential Central Club
Clique (CC Clique) within the KMT, proposed that the program be launched
in Fujian, where a new National College of the Maritime Frontier should be
established. He cautioned that the training program should be carefully
designed to meet Taiwan’s “distinctive colonial environment.”71 Chen’s
rationale here was indeed very close to what Chiang Kai-shek had in mind.
As revealed in his personal diary shortly after the war ended, Chiang thought
that Taiwan’s special geopolitical background and colonial experience had
given it a unique character. Therefore, Chiang believed the island would best
serve as a maritime base in postwar China’s eastern sea frontier. In this
regard, future Nationalist personnel dispatched to work on the island, as
Chiang noted, should be specially nurtured and educated so as to fit in with
Taiwan’s postcolonial environment.72
The Taiwanese members in the Investigation Committee, however,
harbored somewhat different views about their home island’s future position
and its governing structure. They admitted that, as the island had been under
Japanese colonial rule for fifty years, social conditions there were indeed
very different from those in other mainland provinces. Yet, at the same time
they worried that placing too much emphasis on Taiwan’s “foreignness,”
“frontier character,” or “colonial experience” would lead to an inevitable
marginalization of the island’s position in the postwar Chinese political and
territorial structure. Xie Nanguang, an advocate in Taiwan’s anti-Japanese
movement in the 1920s who had subsequently been involved in the KMT’s
intelligence activities on the island in the 1930s and the 1940s, made it plain
in 1944 that he considered the Nationalist government’s frontier and
ethnopolitical policy in China’s ethnic borderlands “a total failure.”
Therefore, the last thing he desired was to see Taiwan being returned and
governed as another frontier territory.73
Huang Chaoqin, another active “half-mountain” member in the
Investigation Committee, shared the same uneasiness. To avoid a relatively
modernized Taiwan being ruled as postwar China’s new frontier, Huang
suggested that the island be considered as an “experimental province” of
China, with its own provincial constitution and appropriate political
mechanisms to accommodate its unique political and societal conditions.74
Ke Taishan, noted for his anti-Japanese revolutionary endeavors in the
1940s, expressed his concerns that the United States might take advantage of
any military landing on Taiwan to dominate the island. Feeling anxious that
the Nationalist authorities would not prioritize the postwar Taiwan issue
when victory arrived, Ke pushed the Investigation Committee to take
immediate preparatory measures to guarantee a smooth transfer of power on
the island. As Ke and his fellow Formosans in the committee saw it, the most
imperative task was to train a great number of Nationalist staff for the
takeover operation, thus lessening the institutional gap between the island
and the mainland.75
During the last months of 1944, a coordinated stance on postwar Taiwan
was gradually formed within the committee. It was generally agreed that the
island would be governed as a “special province” (not a district, region, or
territory) under rules different from those for other Chinese provinces. The
future head of the Taiwan provincial authorities would be given more power
than the governors of mainland provinces. The new Taiwan provincial
structure would be allowed greater authority to cope with the island’s
political, security, economic, and civil affairs.76
 As the Chinese Nationalists became ready for takeover operations in
Taiwan, their attitude grew more assertive. In July 1944, when discussing the
Chinese, American, and British postwar administration of liberated areas
with American ambassador Clarence E. Gauss, T. V. Soong proposed a
three-power conference to settle the issue. He told Gauss confidently that the
Nationalist government would send its officials into Manchuria and Formosa
to undertake effective governance there, while the United States would send
its officials into the Philippines and the British would reenter Burma and
Malaya.77 Having not heard back from Washington about the conference
proposal, a month later Soong again pressed the American ambassador for a
resolution. It was momentarily seen by the United States that a much more
confident Chiang Kai-shek was now eager to secure permanent
administrative and political dispensations in China’s postwar “liberated
areas,” including Taiwan and the Pescadores.78
With research and training programs being kicked off by the Taiwan
Investigation Committee, together with the formation of a relatively
coordinated policy between the Nationalists and the Taiwanese “half-
mountainers,” Chiang Kai-shek had reason to feel sanguine about governing
the expected returned Taiwan. In the summer of 1945, as Japan’s defeat and
China’s victory was only a matter of time, Chiang and most of his aides in
Chongqing would probably never foresee that their new administration on the
island was destined to be a bumpy and unblessed one. They could have never
anticipated that, only sixteen months after the island’s return to China, a
bloody and unnecessary tragedy would profoundly overshadow cross-strait
relations. It would not only lead to a reconsideration of U.S. perceptions and
policies toward the island, but would also have a traumatic impact on the
island’s politics that continues even today.
 2
A Troubled Beginning

IMMEDIATELY AFTER JAPAN SURRENDERED on August 15, 1945, Chen Yi was

appointed Taiwan’s new provincial administrator (xingzheng zhangguan), to
serve concurrently as the island’s garrison commander. Generally speaking,
Washington regarded Taiwan’s new provincial leader as an honest man and
one who had gained Chiang Kai-shek’s confidence. Nevertheless, officials in
President Harry S. Truman’s administration also observed that opinion in
China had not been entirely friendly to Chen Yi, in part because of his
corrupt subordinates back in the Fujian period, and in part because of his
pro-Japanese tendency, “not to mention he had a Japanese wife.”1 Such an
unfavorable opinion was not wholly groundless. Washington’s military
intelligence quarters recalled that during the last months of Chen’s
governorship in Fujian in 1941, conditions in the provincial capital Fuzhou
were so disastrous that the Japanese occupation forces were welcomed as a
means of breaking Chen’s leadership. Although Chen was afforded excellent
opportunities, for example, to launch economic monopolies in the province,
they were carried out with poor results, as many of his men advanced their
own personal interests. As a result, even before Chen assumed his new post
in Taiwan, some in the Truman administration began to fret about his
performance on the island.2 This was by no means a good sign.
As portended before V-J Day, the United States was largely responsible
for Allied military operations at the early stages of post-colonial Taiwan.
Starting from late August 1945, the U.S. Navy began transferring Nationalist
Chinese divisions to Taiwan, in order to repatriate the Japanese troops there
and to safely withdraw Allied prisoners from Japanese POW camps in
northern Taiwan. Between August 29 and September 9, U.S. Navy Task
Group 77.1 proceeded from San Pedro Bay in the Philippines to Keelung,
where its planes and ships participated in the evacuation of, and provided
medical care for, 1,281 recently released Allied POWs. Of these, 1,160
Allied POWs, mostly Americans, were later transferred to Manila, while the
remaining 121 POWs were evacuated to Taipei, where they were
temporarily placed under the care of British Navy Task Group 111.3 then
working jointly with its American counterpart.3
In the meantime, an American “Army Advisory Group” was organized in
Chongqing under the direction of General Albert Wedemeyer, who succeeded
Joseph Stilwell as Chiang Kai-shek’s chief of staff in the China theater, and
was now responsible for the Nationalist takeover in the newly liberated
areas.4 Between early September and mid-October 1945, several small-scale
American military deputations arrived on Taiwan and were soon integrated
into an “American Liaison Group” under the command of Colonel Cecil J.
Gridley. Among the first arrivals were Colonel Reginald L. Hatt, who, acting
as G-2 for Gridley, was in charge of intelligence affairs, and Colonel Leslie
C. Card, who would perform as a representative from the Office of Strategic
Services (OSS).5 As the Nationalist Chinese were handicapped by a lack of
naval transportation capabilities, they relied solely on both technical and
advisory assistance from this liaison group for major takeover operations.6
On October 17, 1945, elements of the Seventh Fleet escorted more than forty
American troopships into Keelung and Kaohsiung. On board were two
divisions from the Nationalist 70th Army, numbering in excess of 12,000
men. Six days later, an American plane left Chongqing for Shanghai, bearing
General Chen Yi and his official party for their new provincial
administrative duties on Taiwan.7
The beginning of Nationalist Chinese recovery of Taiwan seemed both
unimpressive and inauspicious. According to the American Liaison Group,
Chinese army personnel arrived without bedding or clothes and seized what
they needed. To facilitate their operation, the Chinese army units had to
inform the defeated Japanese with shame that the Americans in this group
were their advisors, and thus they were acting according to the group’s
instructions.8 George Kerr, now an assistant naval attaché in the U.S.
embassy, who escorted Chen Yi to Taiwan, recalled that the Chinese officers
arriving at Keelung begged the Americans to send an advance unit overland
through the narrow valleys leading to Taipei some eighteen miles away, as
they had heard that vengeful Japanese suicide squads lurked in the hills.
Formosans soon heard this and laughed at the “shambling, poorly
disciplined, and very dirty” Chinese Nationalist troops as they marched.
According to Kerr, local Taiwanese began teasing that the Chinese “victors”
ventured into Taiwan only because the United States stood between them and
the dreaded Japanese. Kerr went as far as to accuse Chen Yi and his
entourage of seizing every opportunity to cause the Americans a public loss
of face on the island. One example took place during a great parade prepared
for Chen and the Americans. It was arranged that Chen would ride in the
motorcade near the head of the possession, with the senior American officers
somewhere near him. However, it turned out that the Americans’ escorts had
faded away, eagerly scrambling for space as near Chen’s car as possible.
Other Americans in the liaison group were left to find their own way to the
last car in the line. This “small unnecessary official discourtesy,” Kerr
exclaimed, was unmistakably due to a desire to cause the Americans a public
loss of face.9
George Kerr’s somewhat exaggerated narration may be balanced by
accounts given by the British, who took a more sympathetic attitude toward
the Chinese. A Foreign Office field report pointed out that the first
Nationalist troops to land in Taiwan, the 70th Army, were actually well
disciplined, and the impression they created was not unfavorable. It was the
107th Division, arriving later and taking up quarters in Taipei, which created
the most adverse impression.10 In any case, with the assistance of their
American allies, the Nationalists were at last able to fulfill the Allied
General Order No. 1, accepting the surrender of the Japanese armed forces in
Taiwan.
By early April 1946, when the last Japanese soldier had left the island,
the American Liaison Group also withdrew, having no further “official duties
to perform” on the island.11 Indeed, at this point the Americans acted
according to what they had planned. A policy guideline set up in the spring of
1945 clearly demonstrated that one key purpose of Washington’s military
policy to China in the immediate postwar era was to assist the Nationalists in
maintaining peace and security in the liberated areas of Manchuria and
Taiwan, “without undertaking the governance of these territories.”12 Shortly
after V-J Day, Washington further dropped any discussion of issues
surrounding the Chinese jurisdiction over Taiwan and the Pescadores. Still,
experts like George Kerr did not cease to claim that, in a strict legal sense,
transfer of the sovereignty of Taiwan had to wait until a formal peace treaty
with Japan was concluded. There was also no shortage of military concerns
over America’s future interests in Taiwan; between November 1945 and
November 1946, the proposed arrangement for a comprehensive aerial
mapping of Taiwan fully exemplified the high estimation Washington held
over the island’s strategic importance even during peacetime.13
Nonetheless, the fact that no Allied powers voiced any doubts about Chen
Yi’s new provincial administration suggests that, however controversial or
imperfect it was in the early postwar years, the Nationalist government’s de
facto control of the island had been generally recognized. In the summer of
1947, when General Wedemeyer led a fact-finding mission to a Nationalist
China that was rapidly becoming dispirited, a confidential State Department
memorandum prepared for him still maintained this political understanding.14
When the American Liaison Group completed its task and departed from
Taipei, no one predicted that, within years, the legal status of Taiwan, and the
suitability of Nationalist rule over the island, would erupt as one of the most
pressing issues confronting the Truman administration.
 THE CHEN YI ADMINISTRATION

At the beginning, with both military and civilian authority centralized in Chen
Yi’s hands, the new provincial administration was operating rather well. As
one British consular report reckoned around mid-1946, Chen was having
considerable success with the problem of “controlling a population that was
only in name Chinese and was in fact insular and almost alien.”15 Chen, as
depicted by former OSS intelligence analysts who were now affiliated with a
new research bureau within the State Department, had particularly done a
good job of transforming the island’s rich Japanese assets into the Nationalist
properties for China’s postwar rehabilitation and reconstruction.16 This, in
hindsight, could not have been achieved without America’s noninvolvement
in post-colonial Taiwan’s internal disposition, which only occurred because
the idea for a greater U.S. role was dropped the last minute. In late 1946,
Taiwan’s provincial government had controlled a command economy made
up of 70 percent of industrial wealth and 72 percent of Taiwan’s land.17 By
mid-1947, former Japanese assets, businesses, and industries, both state-run
and privately-owned, taken over by Chen Yi’s administration amounted to
15.66 billion in Nationalist Chinese currency (fabi), which was
approximately 7.83 million in US dollars. In addition, a total of 987 units of
Japanese “enemy enterprise property” were confiscated by the provincial
authorities, among which 494 units were incorporated into Taiwan’s public-
owned enterprises.18
Attracting foreign companies and investments for joint ventures in Taiwan
quickly grew in importance among the Nationalist central authorities in
Nanking. In mid-1946, keen discussions were underway concerning which
American or U.S.-based oil companies, such as the Texas Company,
Standard-Vacuum, and Shell, might join the Chinese Petroleum Corporation
in owning an oil refinery in Kaohsiung. Weng Wenhao, Nationalist vice
premier in charge of the project, was convinced that it would be much easier
to launch a petroleum refinery and a development partnership with foreign
companies in Taiwan than in Manchuria, where Soviet influence remained
unfavorably strong and the political situation remained delicate.19 Weng
estimated that $3,700,000 was needed to rehabilitate the Kaohsiung refinery
and develop petroleum potentialities in southern Taiwan, and he urged
Washington to support this project. And yet, the Nationalists had no intention
of turning the Chinese Petroleum Corporation into a private enterprise,
because they considered controlling petroleum products critical to assuring
that supplies would not go into Communist hands. As a result, the State
Department deemed it inappropriate to participate in a project where a state-
owned enterprise functioned both as a business competitor and as a
government regulator.20
In retrospect, the cost of exploiting post-colonial Taiwan’s wealth and
industrial base for Nationalist postwar reconstruction, and specifically for
the struggle against the Chinese Communists, was extremely high. This was
easy to detect when the exploitation policy implemented by Nationalist
leaders like Chen Yi eventually led to the 1947 “February 28 incident” on the
island. Claiming himself a faithful follower of Sun Yat-sen’s philosophy,
Chen Yi strongly believed in placing national capital over private
investment, as well as in emphasizing state enterprises, as the best way to run
postwar Taiwan’s economy.21 These ideas fit perfectly well into Chiang Kai-
shek’s planned strategy of utilizing Taiwan as a supply base in postwar
China’s rejuvenation. Indeed, soon after his inauguration, Chen and his
provincial administration lost no time in reorganizing the Japanese
enterprises into a system of officially operated monopolies. A series of new
regulations were promulgated so as to lay the legal basis for taking over
operations, and new political organs were set up for the same purpose.22
2.1 Chen Yi, the first Nationalist provincial administrator of postcolonial Taiwan. (Courtesy KMT Party
History Institute)

But Chen Yi’s policies, involving such important issues as the disposition
of Japanese assets and economic reconstruction, cultural reintegration and
language, and participation in political activity, all led to disputes with the
local Taiwanese, who felt that their living conditions worsened after the
retrocession. As early as January 1946, an American intelligence report
indicated that Chen Yi’s attempted seizure of private property involved “the
unauthorized use of the name of the U.S. government,” causing resentment
among the people of Taiwan, the breakdown of law enforcement, and
discrimination against the Taiwanese by the Nationalists.23 Believing that
local anti-Chinese feeling was rising to an extent to which an enquiry was
necessary, in early 1946, members of the OSS stationed in Taipei, led by
Captain William J. Morgan, began conducting a public opinion survey
throughout the island. According to George Kerr, now serving as the
American vice consul in Taipei, the surprised Taiwanese were boldly asked
by the OSS staff whether they would prefer continuing Chinese rule, a return
to Japanese administration, or a future under United Nations trusteeship, with
the United States as trustee.24 Although Kerr later claimed the survey to be a
“silly performance,” Chen Yi and his cohorts suspected that Kerr was
endeavoring to “protect Japanese interests” on the island and had had a hand
in this intrigue. An attempt to have Kerr removed from Taipei soon followed,
but failed.25
Between early 1946 and 1947, Chen Yi’s administrative controls were
extended to the private sector of food grain production and distribution. In
March 1946, a Food Grain Bureau with departments in every district in
Taiwan began monitoring the purchase, storage, and distribution of rice and
other products all over the island. Farmers and landlords were forced to sell
their grain to agents of bureau warehouses at fixed prices rather than to
private merchants. Strict punishment would follow if they did not obey the
rules.26 In a report issued that same month, officials in Washington stated that
the island was not too badly off after the war but had suffered considerably
from “maladministration and corruption” by the Nationalist authorities and
the behavior of Nationalist troops. American prestige was high among the
Formosans, whereas the Chinese officials were hated. Meanwhile,
Washington observed warily that “revolutionary moves on the island are
afoot,” although moderate elements were still waiting to see whether Chiang
Kai-shek would send a more efficient administration to Taiwan.27 George
Kerr, who at this juncture was summoned to the State Department to brief
Taiwan’s recent situation, did not hesitate to make his ideas known that the
United States was “throwing away in advance the legal right to intervene on
Formosa if in the future the Allies should need the island as a policing base.”
Extremely annoyed at Chen Yi’s rule in Taiwan, Kerr complained bitterly to
his superiors that Washington was ignoring a moral obligation to see that “the
liberated Formosan people were given just treatment and a guarantee of
basic human rights.” Kerr’s advice, however, stirred almost no immediate
response within the department.28
Chiang Kai-shek at this point evidently had no intention to replace Chen
Yi, who he thought instead had done a decent job by effectively stretching the
state control further into former Japanese military and military-related
commodity stores all around the island. By June 1946, the first batch of
around 100 tanks and other former Japanese army vehicles from Taiwan
were handed over to Nationalist troops stationed in Peking and Xuzhou.29
Toward the end of 1946, as one piece of contemporary scholarly work
argues, Chen Yi’s provincial regime probably controlled even more
economic, political, and military activity than its previous colonial rulers.
Nevertheless, because they had fewer administrative personnel, a relatively
smaller budget, and less understanding of local conditions, Nationalist
officials lacked the ability to manage Taiwan’s economy as effectively and
fairly as the Japanese. For these reasons alone, the new economic controls
made more corruption inevitable.30
The Nationalist government’s outwardly highhanded governance in
Taiwan continued to be closely monitored by the United States. In the fall of
1946, a report sent from Ralph J. Blake, the U.S. consul in Taipei, to
Washington indicated that conditions in Taiwan had been deteriorating as a
result of Chen Yi’s monopolistic tendencies as well as the general corruption
and maladministration. Blake admitted that the future situation on the island
could not be deemed as promising. However, as a Nationalist sympathizer
holding an opposite standpoint to Vice Consul George Kerr, Blake still
believed that Chen’s administration in this wealthy and important island
provided “both an opportunity and a laboratory” to test whether the
Nationalists would be capable of meeting and solving the problems with
which they were faced. A tragedy might be avoided, Black asserted, if
Nationalist leaders were willing to make a change.31
To Nanking, making a leadership adjustment in Taiwan was again not an
issue at all. On October 21, 1946, Chiang and his wife flew to Taipei for his
first official inspection tour. The purpose of his visit was to celebrate the
first anniversary of Japan’s surrender there (October 25) and to express his
goodwill toward the islanders. But Chiang’s mind and thoughts were largely
on the situation on the mainland. While Chiang was in Taiwan, General
George Marshall was making a last-ditch effort for an enduring truce that
might save China from a full-scale civil war. In Nanking, Marshall tried to
persuade Zhou Enlai to agree to further negotiations with the Nationalists.
Zhou counterproposed that the Nationalists cease attacking the Communists
as a precondition for future negotiations, a condition which Chiang
vehemently opposed. This was fully understandable, as by the time Chiang
was about to set off for Taiwan, the Nationalists controlled 76 percent of the
nationwide territory and 71 percent of the population. Within the single
month of October alone, Chiang’s troops had triumphantly recovered sixty-
three cities and counties previously under Communist sway, the biggest
achievement since V-J Day.32 With an evident military preponderance,
Chiang saw no reason to compromise.
Arriving in Taipei, Chiang was deeply impressed by the profound customs
and cultural legacies left by the Japanese. On October 23, while in Taichung
inspecting local infrastructure, Chiang was amazed at how the former
Japanese colonialists overcame great geologic barriers and hardships to
complete the existing constructions. Chiang was so impressed, he could not
help writing down his personal admiration for the perseverance of the
Japanese in his diary on that day.33 But still, to the Chiangs, husband and
wife, the island remained an unfamiliar realm where they were not entirely
comfortable. Worrying about poor sanitary conditions and the possible
contraction of malaria, Chiang and his entourage canceled their trip further
south to Tainan, returning to Taipei the very next day.34

2.2 The first couple pay their first visit to Taiwan on October 21, 1946. (Courtesy KMT Party History
Institute)

Back from central Taiwan, Chiang stayed at a quiet resort on Grass

Mountain, (Yangmingshan) located on the northern outskirts of Taipei. Except
for attending ceremonial activities celebrating the first anniversary of the
island’s return, Chiang immersed himself in the outstanding issues across the
strait. In his mountain resort, Chiang meticulously studied the situation in
Manchuria with Premier T. V. Soong, who flew from Nanking to Taipei in
order to persuade his brother-in-law to accept George Marshall’s advice on
stopping the attacks on the Chinese Communists in Andong, a province in
Manchuria. Chiang refused and insisted on opening fire. The two then
worked together at Grass Mountain, drafting instructions and orders that
were speedily dispatched to their military subordinates thousands of miles
away.35
 The next day, news of Nationalist military success in China’s far northeast
reached Taipei. Chen Yi entertained the elated and relaxed Chiang at his
residence with Japanese cuisine. Chiang was indeed delighted, noting in his
diary that this was his first taste of Japanese cuisine since May 1927, when
the Japanese army confronted his Northern Expedition army in Shandong and
killed his envoy, who had been instructed to negotiate a settlement. Before
the banquet came to a close, Chiang gave Chen his advice: build more
schools, barracks, and prisons; strengthen the island’s garrison forces; and
keep the island away from communism.36 As Chiang spoke, we may surmise
he never visualized that, just within a short two years, Grass Mountain would
become Nationalist China’s last political nerve center. Neither could anyone
prophesy that this colony-turned-province island frontier would before long
become the Nationalists’ last territorial refuge.
 THE STORM OF FEBRUARY 1947

Before returning to the mainland, Chiang Kai-shek met with the local mass
media in Taipei. He emphasized the evidence of successful reconstruction
that he professed to have seen on every side, and he wished Taiwan and its
people “all the good luck in building the island province as a model for [the]
whole [of] China.”37 Indeed, good luck seemed exactly what the island
needed most. During the year 1946, it was estimated that 80 percent of the
native-born Taiwanese industrial workers lost their jobs, and by January
1947 local commodity price indices had risen 700 percent for food, 1,400
percent for fuel and building materials, and 25,000 percent for fertilizer. It
became a common phenomenon that Taiwan’s capital goods and rice
frequently vanished into the mainland black market. The corruption became
so prevalent that, beginning in 1947, relief supplies from the United Nations
Relief and Rehabilitation Administration (UNRRA) shrank, allegedly, by an
estimated 50 percent as they passed through the hands of Chen Yi’s
lieutenants. Within a year of the Chinese takeover, middle-class Taiwanese
were on the verge of bankruptcy.38
A series of crises on both sides of the Taiwan Strait between the fall of
1946 and early 1947 formed the context of fear and uneasiness in Taiwan,
eventually leading to the bloody February 28 incident. On January 6, 1947,
General Marshall abandoned his mediation efforts between the Nationalists
and the Communists and returned to Washington. The seeming imminence of a
full-scale civil war on the mainland was increasingly felt in Taiwan. Around
the same time, rumors spread everywhere on the island that Taiwan had been
sold to the United States in return for a huge credit for military use, or that the
island would soon be returned to Japan by General Douglas MacArthur, now
supreme commander for the Allied powers (SCAP) in Japan.39 Taiwan’s
currency, which was tied to the mainland’s finances, depreciated rapidly, and
the provincial administration was gradually losing control of the economy.
On February 14, Taipei’s rice market closed briefly because of a riot as
citizens struggled to purchase ever-smaller amounts of rice at increasing
prices. Fear gripped the island, and large-scale robberies continued to take
place in the towns and cities of Taiwan.40
On the evening of February 27, 1947, six Nationalist agents of the
Tobacco and Wine Monopoly Bureau, accompanied by four policemen,
confiscated cigarettes and cash from a widow in her forties and knocked her
down when she protested. When people nearby tried to defend the woman,
the police fired several shots into the crowd and killed at least one person.
This was the spark that ignited groups of Taipei citizens who marched to the
police headquarters to demand the arrest of the policemen responsible for the
shooting.41 The following morning, a larger crowd decided to march to Chen
Yi’s headquarters and to the office of Tobacco and Wine Monopoly Bureau
demanding immediate punishment of the policemen, compensation to the
bereaved families, relaxation of the tobacco monopoly, and apologies. As the
crowd approached, Chen’s guards fired machine guns and killed several
people. This marked the beginning of a general uprising against Nationalist
Chinese authorities, which soon spread to many of the island’s urban centers
as Taiwanese and government forces battled for control of public
infrastructure, such as office buildings, railway stations, and police stations.
Outside Taipei, the situation was far more egregious. A few anti-KMT
groups were organized, including the Communist-inspired “27 Brigade.”
They looted machine guns, rifles, and grenades from military arsenals in
central and southern Taiwan. The now-armed groups shot or injured
Nationalist soldiers, and this in turn precipitated the house arrest or
execution of those who participated in the uprising.42
By the time Chen Yi reported the bloody chaos in Taiwan to Nanking,
Chiang Kai-shek already had serious problems both in China proper and in
the outlying areas. Battles were now being fought between the Nationalists
and the Communists in North and Northeast China. Social instability and
riots at regional levels swept from Xinjiang in the far northwest to Inner
Mongolia in the northern steppe and Tibet in the far southwest. In Urumqi,
beginning in early February 1947, several hundred of the local Uighurs
gathered and besieged the government offices in the center of the city,
demanding more political, military, financial, and economic autonomy from
the Nationalist provincial authorities. Their demands were hastily
telegraphed to Nanking, awaiting Chiang’s arbitration.43 In Inner Mongolia,
pro-Communist Mongols were ready to create an autonomous region free
from Nationalist jurisdiction, whereas their pro-KMT fellow compatriots
also demanded more political autonomy from Nanking.44 In Lhasa, a civil
war had been brewing between Taktra Rimpoche, the regent of the Tibetan
government, and his predecessor Radreng Hutuktu since early 1947. The
instability in Tibet served as both a crisis in China’s border security and an
opportunity for the Nationalist power penetration in this ethnic territory.
Some in Nanking deemed the trouble in Lhasa a decent chance for the
Nationalists to interfere with Tibet’s internal politics and increase their
influence. As a result, confidential plans for a possible military adventure
were hatched, awaiting the final approval of Chiang.45
The riot in Taiwan was thus yet as another piece of unwelcome news,
adding onto Nanking’s already problematic frontier dealings on the mainland.
While Chiang Kai-shek was angry at Chen Yi’s incompetence in dealing with
the crisis, he also attributed the uprising to the “foreignness” of the islanders;
having long been colonized and “enslaved” (nuhua) by the Japanese and
detached from the Chinese motherland, Chiang sniffed, the Taiwanese were
generally “fearing might and harboring no virtue” (weiwei bu huaide).46
Therefore, the most effective way to maintain peace and order in a newly
retroceded frontier territory was through military strength.47
Realistically, unable to ascertain from afar how serious conditions in
Taiwan were, Chiang was left with few alternatives but to rely entirely on
the personal judgment and suggestions of Chen Yi and Ke Yuanfen, Chen’s
chief of staff in the Provincial Garrison Command. On March 2, a “February
28 Incident Settlement Committee,” composed of prominent Taiwanese
elites, representatives of local assemblies on the island and from other walks
of life, was organized by anti-government elements to negotiate with Chen
Yi’s administration. During the first week of March, committee
representatives met with Chen, presenting a list of thirty-two demands for
reform of the provincial administration. They requested, among other things,
greater autonomy, abolition of trade monopoly, free elections, surrender of
Nationalist forces to the committee, an end to government corruption, and
control over the police and military. As passions ran high, Taiwanese
demands moved toward fundamental political reform under the rubric of self-
government.48
By March 7, Chen Yi, dumbfounded and obviously losing his patience,
cabled Nanking to send reinforcements to Taiwan to restore order and
“exterminate traitors” (su jian). Chiang agreed; to him, consolidating the
Taiwan “backyard” was now critical, as at the moment his troops were
engaging in increasingly strenuous battles with the CCP on the mainland.
Nevertheless, it was a painful decision. On March 8, Chiang confided to his
diary that he was now at a loss and did not know what to do about the crisis
in Taiwan, when the military crises in Shandong, Henan, Shaanxi, and
Manchuria, egregious and tense, had already confounded him abysmally.49
Military pacification now seemed the only option. On March 8,
Nationalist reinforcements from the mainland arrived first in Keelung, then in
Kaohsiung. Chen Yi soon declared martial law throughout the island and
announced that the February 28 Incident Settlement Committee was illegal,
that it had become part of a revolt. The Nationalist forces launched a
crackdown, squelched the opposition to the KMT, and helped reassert
government control by the middle of March.50 Thousands of people,
including Chinese mainlanders as well as Taiwanese, were killed or
imprisoned for their real or perceived dissent, leaving the Taiwanese victims
with a deep-rooted bitterness toward the Nationalist authorities, and by
extension, toward all Chinese mainlanders. This crackdown was a forbidden
topic until 1987, and became the subject of numerous, albeit divided and
conflicting, studies and competing memorials in the years since. The political
hangover of the February incident continues to haunt the island’s politics
even until today.51
 THE AMERICAN ROLE REAPPRAISED

The role the Americans played in this blood-shedding episode deserves our
careful scrutiny. When Chiang Kai-shek toured Taiwan and praised Chen
Yi’s prowess and overall “achievements” on the island, he probably did not
realize that the number of unsatisfied and disenchanted Taiwanese had grown
to such an extent that progress had been made by local dissidents for a
possible change of the island’s status quo. A situation report submitted by
Ralph J. Blake to his superiors in the U.S. embassy in Nanking, dated January
10, 1947, revealed the uneasiness of the public, which fed numerous rumors
and speculation, and that these reflected the uncertainty of political and
economic conditions both on the mainland and on the island. Surprisingly,
Blake’s report revealed that representatives of “a group of well educated
men, with whom the Mayor of Taipei is said now to be associating himself”
investigated Taiwan’s problems and concluded that, with any crisis on the
mainland, either full-scale war or collapse of the present economic structure,
would create a crisis in Taiwan, during which a struggle for control of
Taiwan would ensue. If the crisis did occur, as Blake went on to report, then
representatives of this group would ask three things of the United States: that
America refrain from transporting mainland troops to Taiwan, as was done
after the Japanese surrender; that America send technical and administrative
advisors to Taiwan to help it through a crisis in which they were determined
not to be engulfed in the mainland chaos; and that America lend financial and
material support for the rehabilitation of commerce and industry.52
George Kerr recounted that, on January 15, 1947, this group of “educated
elites” drew up a petition addressed to General George Marshall, who had
just been made secretary of state in the Truman administration. Kerr claimed
that more than 150 signatures were attached, of which some represented
spokesmen for organizations or groups of private citizens, numbering about
800 in all. But when it was ready, leaders of this group suddenly decided to
delay presentation to the U.S. consulate in Taipei. Instead, they now intended
to appeal to the Nationalist government in Nanking, hoping that it might
induce Chiang Kai-shek to intervene in Taipei. But nothing happened after
their appeal.53 A month later, in mid-February, the group at last brought to the
consulate the long petition, which they had addressed to General Marshall.
The crucial point was that the shortest way to reform a currently
malfunctioning Taiwanese provincial government was to wholly depend on
the “United Nations Joint Administration” on the island, and cut political and
economic ties with China for some years. The group sought American
support in fulfilling this goal so as to prevent the Taiwanese from becoming
“the stark naked.”54
There was no indication as to whether the petition letter was being sent
out to Washington or to the U.S. embassy in Nanking. This was barely
surprising; Ralph Blake had long made it unmistakably clear that, as an
official body, the American consulate in Taipei should not be allowed to take
an interest in the Formosa problem, and that its official relations were with
Chen Yi and his provincial authorities, and not the local Formosan groups.55
But the situation changed dramatically after the bloodshed of February 28.
On March 3, representatives from this “well-educated Taiwanese” group
resubmitted an ameliorated version of the petition letter to the consulate.
Instead of asking for a “United Nations Joint Administration” in Taiwan and
to cut their ties with China for some years, they now urged American
assistance in seeking direct UN intervention pending the final transfer of
sovereignty to China. Moreover, the group advocated that they would “resist
[the] present Government if it seeks military revenue or fails to meet popular
demands for reform to be discussed from March 10.”56 Presumably under
heavy pressure from his colleagues within the consulate, notably George
Kerr and Robert J. Catto, the director of the United States Information
Service in Taipei, Ralph Blake backed down and changed his
nonintervention stance. He now concluded, in his report to the State
Department dated March 6, that the only panacea available was an
“immediate American intervention in its own right or on behalf of the United
Nations” to prevent disastrous slaughter by the Nationalist forces. Blake
went on to argue that American prestige was high, and intervention was
profoundly desired by the local people. The Taiwanese assumed that United
Nations control would be predominantly American. In the end, Blake warned
that “civil war on Formosa is [the] most probably alternative” if no
immediate action was undertaken.57 Notably, Blake’s analysis came out two
days before Nationalist reinforcements arrived and major bloodshed began.
Blake and Kerr were not alone in their opinions. G. M. Tingle, the British
consul in Tamsui (on the northern tip of Taiwan), wired back to London
immediately after the incident that the best solution to the problem of Taiwan
now “would be for the island to be removed from mainland Chinese
administration.” He believed that what the Taiwanese desired was to govern
themselves, and until such time as they were able to accept such an
undertaking, a UN trusteeship would “almost certainly meet with Formosan
approval.” In his report to Whitehall, Tingle shared Kerr’s resentment of
Chen Yi, observing that “British trade, along with other private trade, will be
allowed no chance here” if the present provincial regime continued.58
In the midst of the riot and chaos in Taiwan, whether the U.S. government
should withdraw American citizens on the island became an issue igniting
much controversy. On March 5, the consulate in Taipei dispatched an urgent
telegram to the embassy in Nanking stating that, as the crisis rapidly
developed throughout the island with imminent troop reinforcement from the
mainland, removing consular families and other UNRRA staff and citizens
should be seriously considered. The consulate further suggested that the
embassy send a plane at once to assist with the evacuation.59 Upon receiving
this request, Ambassador John Leighton Stuart relayed this concern to the
Nationalists. Although two days later the consulate reevaluated the
evacuation operation as now unessential, the idea of evacuation itself greatly
annoyed and humiliated Chiang Kai-shek, who in his diary impugned the
American diplomats as “shallow and flippant.”60
On March 10, two days after the Nationalist reinforcements arrived and
began cracking down on the rebels throughout the island, George Kerr
submitted a new memorandum to the embassy in Nanking via Colonel F. J.
Dau, assistant military attaché to the embassy, who was then ordered to fly to
Taiwan and investigate the situation. Having realized that the Nationalist
military suppression meant there was now little hope that the island would
come under UN trusteeship, Kerr quickly shifted his stance, suggesting
instead that Washington should encourage Chiang Kai-shek to replace Chen
Yi with a civil provincial administration. To prevent the strategically
important Taiwan from succumbing to communism as a result of the
February-March massacre, Kerr meanwhile urged that American economic
assistance be rendered to a newly reformed provincial administration.61
Despite such a subtle shift of stance on China’s policy toward Taiwan, as
revealed in Kerr’s memorandum, he was now widely resented by the
Nationalists as the major source of the island’s turmoil. On March 17, Kerr
was ordered to leave Taipei for the embassy in Nanking, where he was
assigned the task of preparing a comprehensive report on the recent turmoil
in Taiwan. He would never again go back to his consular post in Taipei.
During the February and March incidents, observations and
recommendations in reports from Blake and Kerr had become so
controversial, so loaded with personal emotions, that Ambassador Stuart
found it necessary to warn the State Department to be cautious about their
narration and evaluation.62 In early April, Stuart further instructed all
American consular officers in China that telegrams “which are speculative or
interpretative in nature” should henceforth be sent to the embassy in Nanking
only, not to Washington.63
Although he had made himself extremely unwelcome both in China and
Taiwan, George Kerr may have never realized that his March 10
memorandum would soon trigger a series of new political developments
about Taiwan. His idea of giving economic aid to help Taiwan’s newly
organized administration was soon incorporated into Stuart’s official report
to Washington, in which the ambassador suggested that Taiwan should be
treated as “a special economic area and employ a group of American
advisers to aid in developing its economics.” Although ostensibly this was
about economic advantages, Stuart argued that the goodwill of the local
Taiwanese and the realization of enlightened democratic principles adapted
to the historical circumstances could be secured as essential factors.64 His
suggestion soon got feedback from Washington. On April 2, Under Secretary
of State Dean Acheson cabled Stuart, saying that assistance in economic
development for Taiwan appeared sound in principle, although it was
necessary first to question the practicality of sending technical advisers
without reasonable prospect of gaining support from the local people.65
In hindsight, Kerr’s memorandum of March 10 may have served as an
unintended, indirect catalyst to speeding up the Nationalist reorganization of
Taiwan’s provincial administration. When Chiang Kai-shek met with Stuart
on March 29, the American ambassador, who apparently concurred with
Kerr’s idea, was polite and yet bold enough to suggest that Chiang should
appoint a civilian official, preferably T. V. Soong, who had recently stepped
down from the premiership, as Taiwan’s new governor. Stuart reminded
Chiang that with such a man in charge and an emphasis on civil rather than
military administration and on economic restoration, better treatment of the
islanders and in general a more honest and enlightened administration could
be hoped for.66 It should be stressed here that initially Chiang by no means
intended to replace Chen Yi, as he still did not believe Chen’s disposition of
the Taiwan uprising was entirely wrong.67 When Chen’s dismissal seemed
inevitable, and when T. V. Soong showed no interest in taking up the new
position, other possible candidates surfaced, including several Nationalist
high military chiefs and Chiang’s son Ching-kuo. But Chiang ruled out all
these possibilities. Conspicuously, he needed to make American reaction his
primary concern.
U.S. policy therefore moved toward the creation of a certain kind of
political-economic setup on Taiwan, even though at this point no one
imagined that this new policy direction eventually would lead to an
“unintended state” after 1949. In mid-April 1947, Kerr finally completed his
memorandum on Taiwan for Stuart, who revised it and passed on the final
version to Chiang Kai-shek and other Nationalist high officials. In this
memorandum, Kerr reemphasized the importance of preventing communism
from infiltrating Taiwan after the uprising. Beginning on a conciliatory note,
Kerr said there could be no question that “Formosan-Chinese have felt
loyalty to the Central Government and toward the Generalissimo.” Yet he
also warned that, after the massacre, “a local form of communism is not only
possible but is believed to be a highly probable development if economic
organization collapses under the pressure of continued military occupation.”
Distancing himself from the idea of placing Taiwan under UN trusteeship,
Kerr, whether genuinely or expediently, instead advocated a prompt and
fundamental reform of the island’s provincial mechanism that included both
the Formosans and the Chinese mainlanders, to restore the island to “its
former high level of political allegiance and of economic production.”68 Four
days after receiving the memorandum, Chiang Kai-shek declared that Wei
Daoming, a civil official who had recently been the Chinese ambassador to
the United States, would succeed Chen Yi as Taiwan’s new provincial
governor.
 PICKING UP THE POST-TRAGEDY PIECES

With the “recommendations” from the American embassy, which were

essentially based on George Kerr’s ideas, Nanking began restructuring
Taiwan’s provincial administration and recruiting more Taiwanese elites into
the island’s political apparatus. More practically, top Nationalist leaders like
Chiang Kai-shek were pressured to take remedial measures to restore peace
and order on the island, at a time when their struggle with the Chinese
Communists was rapidly turning ugly on the mainland. Chen Yi was first
relieved of his post as a result of a decision made at the KMT Central
Executive Committee on March 23, and on April 22, Wei Daoming was
installed as Taiwan’s new provincial leader. Meanwhile, the island was
made a regular province, one of the thirty-five provinces of China, and the
provincial governor was given the official title of “Chairman of the
Provincial Council,” to conform with the practice followed in all the other
provinces. The Taiwan Provincial Administrative Executive Office, the
single organ in which great power had been concentrated, was duly
abolished.69
The newly organized Taiwan Provincial Council now consisted of
fourteen members, half of whom were “half-mountainers,” most of them with
mainland experience. The great majority of Chen Yi’s cohorts were replaced
by new appointees, a considerable proportion of whom were Taiwanese.
Although the provincial chairman was given jurisdiction over the island’s
armed forces, its civil and military authority was substantially curtailed.70
Such a power reduction in the aftermath of the 1947 uprising bore one
unforeseen result, and its significance would not be felt until sometime later.
Simply put, the decreased provincial authority served as a crucial factor in
the final survival of Chiang Kai-shek’s political life in the late 1940s and
early 1950s, when the Generalissimo, who was then head of the KMT party
but not the head of state, found himself still holding some bargaining chips
vis-à-vis a U.S.-backed and yet authority-constrained Taiwan provincial
chairman over the island’s politics.
John Leighton Stuart was outwardly pleased with the new political
arrangements on the island, which he deemed as “a step forward as regards
the susceptibilities of the Taiwanese.”71 George Kerr, however, was more
wary of the new appointments. On the eve of his departure from Nanking to
return to Washington on April 28, Kerr reminded his superiors both in the
embassy and the State Department that it remained too early to know whether
the new provincial governor’s services abroad, especially in the United
States, would be played up locally to create an encouraging aura of
liberalism in Taiwan. He was conscious enough to point out that Wei
Daoming’s prospects for success as civil governor of Taiwan would be
conditioned by the influence he could exercise over the military, the well-
entrenched bureaucracy left by Chen Yi, and the policies so far espoused by
Nanking, which had led to the bloody episode.72
Admittedly, Kerr’s concerns were mostly correct, and perhaps what was
more inspiring to him was that the new provincial authorities were
endeavoring to improve the island’s situation. Fairly speaking, during his
term in office for a year and a half, Wei Daoming made an honest effort to
undo the ill effects of Chen Yi’s administration. He publicly expressed
himself in favor of free enterprise on the island. A number of government
enterprises, such as the Match Company, were newly opened to private
operation and investment. Mining and industrial concerns, jointly operated by
government and private interests, were also turned over to private hands.
Meanwhile, the Monopoly Bureau was changed to the Public Sales Bureau,
which was then revamped by restricting the number of commodities it could
sell to retailers. The Trade Bureau was reorganized into a new Material
Supply Bureau to streamline its handling of commodities sold abroad and
produced by publicly own enterprises, and their sales to meet the demands of
private enterprises. The reform of the two bureaus, as one scholarly work
maintains, tremendously increased the number of private enterprises,
allowing local Taiwanese business people to conduct their affairs with more
freedom and certainty than before.73
One unnoticed development the above policy change brought about was
that it marked the beginning of a gradual shift of Taiwan’s economic policy
reformulation and rethinking. In their on-the-spot investigatory reports to
Chiang Kai-shek, both Minister of National Defense Bai Chongxi and the
supervisory commissioner for Fujian and Taiwan provinces, Yang
Lianggong, unanimously urged that economic reforms be implemented on the
island. Their main idea was that Taiwan’s private and publicly owned
enterprises should be separated, and that the power of the latter greatly
reduced. Bai especially urged that Nanking should send delegates to all
branches of the Taiwan provincial government to check on the progress of
these economic reforms and to determine whether further changes were
needed. Chiang apparently agreed with these points.74 While the United
States urged Nanking to reform Taiwan’s inept administration, these two
investigators from within the Nationalist government proposed a salient
departure from the former governor’s economic philosophy on the island.
On the whole, although it cannot be said that economic conditions
improved forthwith under Wei Daoming’s administration, the situation did
not become appreciably worse. Around mid-1948, as one political report by
the British consular staff on the island specified, with Wei’s skillfulness and
diplomacy, the political situation was calm and no discontent had been
permitted to become vocal, thus furthering consolidation of Chinese rule on
the island.75 The new economic measures imposed after the riot, notably the
lifting of Chen Yi’s state socialism, were originally intended both to pacify
the native Taiwanese and to fulfill the ambition of making the island a model
for the mainland Chinese provinces. It was thus historically accidental that
those post-traumatic measures inadvertently laid the foundation for the
subsequent formation of a Nationalist island state and unwittingly sowed the
seeds of Taiwan’s free market economy. Despite some positive signs coming
out in the field of post-Chen Yi Taiwan’s domestic affairs, in diplomatic
terms, the riot, coupled with a worsening situation on the mainland, had
inevitably brought about a gradual shift of American policy toward the
island. Such a change of policy, in retrospect, played a crucial part in the
subsequent development in China’s domestic and regional politics. It was
also fatefully entwined with the making of Nationalist China on Taiwan.
 3
Reformulating U.S. Policy toward Taiwan

DESPITE GEORGE KERR’S recall, his rich experience in Taiwan remained one
important source of information within Washington’s policy-planning circle.
Upon returning to Washington around May 26, 1947, Kerr was summoned to
present his views concerning post-February 28 incident Taiwan to the State
Department chiefs. At that meeting, Kerr urged Washington to develop a new
formula to prevent Taiwan from falling to communism. He stressed the
importance of U.S. aid in the existing economic structure of the island, and
urged international “joint management” following the withdrawal of
Nationalist troops. He also suggested that if advantage could be taken of “the
de jure status of Taiwan” to insist on a supervisory body to reduce and check
the “current excesses” of the Nationalist administration, the island might be
reserved under temporary international control as a stable foothold for future
liberal reconstruction efforts in China.1 According to Kerr, his “imperialist”
line of argument was snubbed. John C. Vincent, director of the Office of Far
Eastern Affairs, saw him to the door after the briefing with remarks to the
effect that “no one in the United Nations and certainly very few in
Washington would ever be interested in Formosa.” Without a doubt, Kerr
was angry about this policy of “no-policy” for Taiwan.2
To be sure, something was actually about to change in America’s Taiwan
policy. As Chiang Kai-shek’s military position throughout North China was
turning dreary, there began a lurking uneasiness among Washington’s
strategists. Starting in early 1947, Chinese Communist units retreating from
northern Jiangsu joined with others from central Shandong to counterattack
their Nationalist pursuers on the Shandong-Jiangsu provincial border.
Chiang’s forces were woefully routed with the loss of some 40,000 men and
twenty-six tanks, with which the Communists began building an armored
column of their own. The ensuing defeat of Nationalist forces in central
Shandong in late February cost them another 30,000 men, and the loss of
control of the strategic Jinan-Qingdao railway now put the local Nationalist
authorities in an extremely precarious situation.3
During April and May 1947, the Nationalists launched a major campaign
against their Communist rivals in Shandong Province, where Chiang used
some twenty divisions, about 400,000 men, against an estimated 250,000
Communists. The result was a disaster for the Nationalists, who may have
lost as many as 15,000 men killed or wounded during the epic battle of
Menglianggu in south-central Shandong between 14 and 16 May. As difficult
as it was for many to believe, the Nationalist 74th Reorganized Division,
then regarded as Chiang’s best division, was completely annihilated. The
division commander and his staff committed suicide before being captured.4
In the meantime, the losses sustained by the People’s Liberation Army (PLA)
were soon replenished and its munitions quickly replaced, a situation which
obviously did nothing to promote Nationalist morale. This critical battle in
North China also stunned U.S. military experts, who were surprised to
discover that the Communist army had been transformed from a guerrilla
force into a regular army within a relatively short period of time.5 In fact, the
implication of the Menglianggu campaign was so crucial to the subsequent
military balance between the Nationalists and the Communists that many
historians have cited the battle as a major turning point in the Chinese civil
war.6
In the summer of 1947, U.S. President Harry Truman sent General Albert
Wedemeyer to lead a fact-finding mission in China to assess the general
situation and the practicality of further aid for the Nationalist government.
Taiwan was included in Wedemeyer’s tight schedule. On August 11,
Wedemeyer and his delegates arrived in Taipei, where they were warmly
received by Governor Wei Daoming and other provincial leaders. According
to George Kerr’s account, presumably based on the information given by his
contacts in the State Department, during the visit Wei sensed the general’s
lack of enthusiasm but did his best to convince him that Taiwan was indeed a
bastion of democracy.7 In his own report to Washington, however,
Wedemeyer claimed that the experience in Taiwan was most enlightening.
There were indications, the general specified, that at the time of his
inspection tour the Taiwanese were “receptive toward U.S. guardianship and
United Nations trusteeship.” The general also observed the Taiwanese now
feared that the Nationalist government would contemplate “bleeding their
island to support the tottering and corrupt Nanking machine,” and he thought
that their fears were “well founded.”8
Albert Wedemeyer’s bold statement on Taiwan would not be made known
until two years later, in August 1949, when his observation was compiled
into the China White Paper. And yet, publicly, to avoid causing suspicions
on the Chinese side, the general did not propose anything relating to Taiwan
during his fact-finding mission in China. Instead, while in Taipei, Wedemeyer
asserted that the United States “has no interest in Taiwan,” a statement that
surely chilled the hearts of Taiwanese elites who might have hoped he would
at least suggest a U.S.-handled investigation of the situation on the island.9
The general’s professed reassurance no doubt pleased the Nationalist
authorities. Nevertheless, as the situation in China steadily declined, a shift
of stance toward the island on the U.S. side seemed inevitable. On August
22, 1947, two days before Wedemeyer left China, a confidential report, in
many ways a reincarnation of George Kerr’s earlier reports, was submitted
to the general by the American embassy in Nanjing. The report highlighted
that Nationalist China’s de facto control of Taiwan was generally recognized,
but the transfer of sovereignty of the island was by no means being
formalized. It went on to propose that an efficient government and a
rationalized economy on the island, with its insulation from the termite-
ridden economy and finances of the mainland, would be of great interest to
the United States. Only if a politically and economically enlightened
administration were set up in Taiwan, the report argued, would American
involvement or even governmental economic aid be justified. It concluded by
suggesting that personal references be made by Wedemeyer to Chiang Kai-
shek to utilize Taiwan as “a Sino-American joint training ground” for a
division and perhaps more of Nationalist Chinese troops.10
On the day after the Embassy’s report, in a personal memorandum to
Wedemeyer, Philip D. Sprouse, assistant chief in the State Department’s
Chinese Affairs Division and a member of the mission, went one step further
by claiming that the Taiwanese now desired a United Nations trusteeship or
an American guardianship for the island because they felt “the lot of the
island under Chinese rule [was] hopeless.” Pretty much echoing what George
Kerr’s advice, Sprouse implied that the misrule of the Chinese on the island
and the February uprising against that rule had no Communist inspiration, but
he fretted that the situation now offered “fertile ground for the spread of
Communist influence.”11
General Wedemeyer’s fact-finding mission was meant to strongly
influence the decision-making process of Washington’s military assistance to
Chiang Kai-shek. A top-secret report by the State-War-Navy Coordinating
Committee in early October 1947 temporarily shelved sections on how the
U.S. policy toward China should be formulated, awaiting the data gathered
by Wedemeyer’s mission for its finalization.12 While a more concrete policy
was still waiting to be formulated by the State and Defense department
chiefs, one matter was getting crystal clear in their minds. As revealed in its
report, the Coordinating Committee was now quietly reviewing the legal
status of Taiwan, and its conclusion was that the island should be officially
acquired by the Chinese central government only after a formal peace treaty
with Japan was concluded.13
 SOUTH CHINA AS AN ANTI-COMMUNIST BASE

Around the same time as the Wedemeyer mission, it became evident that
Chiang Kai-shek was planning to use Taiwan as a safe haven for military
training. One indication was his decision to send General Sun Liren to
initiate a new military training program on the island. In the summer of 1947,
Sun, accompanied by a group of U.S. military advisers, arrived in Taiwan to
inspect a suitable location for the training program. When this piece of news
began to circulate, it must have brought about mixed reactions among those
who had long wished to see a change of U.S. policy toward the island. As a
Virginia Military Institute graduate, Sun spoke fluent English, and his
capability and talent during World War II had become a legend among many
senior officials in U.S. military and political circles, including General
MacArthur. In November 1947, Sun’s training program was inaugurated in a
former Japanese military base in Fengshan near Kaohsiung.14 While the idea
of a UN trusteeship of Taiwan was brewing, the presence of the much
admired Sun in Taiwan was deemed, particularly among American naval and
intelligence chiefs, as an encouraging sign that Taiwan could be secured as a
link in the Japan-Okinawa-Philippines strategic chain.15
Sun Liren’s military training program in southern Taiwan began shortly
after the ignominious defeat of Chiang’s best army divisions in North
China.16 More critically, a series of Nationalist military fiascos, beginning in
the spring of 1947, had led to new, key geo-strategic planning among senior
Nationalist leaders. In the eyes of Chiang Kai-shek and his core advisers, the
abysmal defeat in North China, along with the general downward spiral of
the military situation in Manchuria, signaled the probable end of Nationalist
rule in territories north of the Yangtze.17 On June 19, 1947, when meeting
with John Leighton Stuart, Chiang for the first time admitted that the military
situation in Northeast China was “hopeless,” asserting that he had come to
realize this just recently. Without hesitation, the American ambassador shared
Chiang’s pessimism with his British counterpart in China.18 Sun Liren’s new
assignment on the island of Taiwan, rather than being launched anywhere on
the mainland where it might be exposed to Communist attack, was also
viewed as an indication of Nanjing’s concern with the deteriorating political
and military situation, and of resignation to the likelihood of losing much or
all of northern China and perhaps even all of the mainland.
In order to fight a prolonged war against the Communists, the Nationalists
needed to establish a safe territorial stronghold south of the Yangtze, where
Communist influence was still weak and where war provisions and natural
resources were readily accessible. It was thus ironic that in September 1947,
when Nationalist Defense Minister Bai Chongxi pledged aloud that the
government would use its full strength to suppress the Communists in North
and Northeast China, surreptitious preparations for the worst-case scenario
had already been taken by Chiang Kai-shek.19 Before such preparations
could begin, however, Chiang and his advisers had first to decide where to
build up this putative territorial redoubt. Given its superb geographical
conditions as a major agricultural province, its location on the South China
Sea where it faced the outside world, and a historical legacy as the
revolutionary base of the KMT, Guangdong Province was selected by Chiang
as the place to form the nucleus of the future Nationalist power base on the
mainland.20
On August 20, 1947, Nanjing promulgated a new formula for its
counterinsurgency and mobilization activities aimed at tightening Nationalist
control in the southern rear base. In this new anti-Communist undertaking,
Guangdong was stipulated to be established as the pivotal geostrategic point
for the struggle against the Communists.21 Four weeks later, T. V. Soong,
recently retired from the premiership, was appointed to the new
governorship of Guangdong. At the same time, he was appointed head of the
Generalissimo’s field headquarters in Guangzhou, a position that would
legally empower him to command all Nationalist forces in both Guangdong
and Guangxi provinces. Soong’s new appointment, which was in fact a
downgrade in the Nationalist hierarchy from a constitutional point of view,
still encountered some opposition within the KMT party, especially from the
powerful CC Clique, then firmly in control of the province’s party
organization and secret service. As American career diplomats had
observed, Chiang had never truly liked his brother-in-law, whom he thought
too presumptuous; but Chiang distrusted local military and political figures in
Guangdong, the so-called Guangdong Clique, more than Soong. On a more
practical note, Chiang thought that Soong’s personal network with the
Westerners would be of great value in attracting much-needed financial and
economic support to strengthen the central government’s position in South
China.22
From the outset, T. V. Soong endeavored to demonstrate that he was a
provincial governor of a very different kind. To build a solid anti-Communist
bastion in Guangdong, Soong prioritized the suppression of local “bandits”
whom, until late 1947, the Nationalists refused to recognize as an organized
Communist force.23 Realizing he could not expect to obtain genuine
collaboration, not to mention trust, from the local militarists and politicians,
Soong instead sought assistance and advice from Sun Liren, his erstwhile
subordinate (Sun had served in the Finance Ministry Tax Police Regiment in
the early 1930s when Soong was the finance minister). Shortly after Soong
was sworn in as the provincial governor, he asked Sun, then training the new
armies in southern Taiwan, to recommend a capable officer to serve as his
chief of staff in Guangzhou. General Hu Weida, a graduate of the U.S. Armor
School in Fort Knox, Kentucky and a faithful follower of General Sun, was
his recommendation. Hu soon became Soong’s trusted military adviser.24 In
the following months, Soong continued to seek additional officers from Sun
to conduct his “banditry suppression” in South China. Nevertheless,
successful anti-Communist operations were getting more and more difficult
to come by, and so in September 1948, Sun personally flew from Kaohsiung
to Guangzhou, where he advised an increasingly hard-pressed Soong how
best to manage the province’s military.25

3.1T. V. Soong inspects the Guangdong provincial garrison force, ca. 1948. During the Chinese civil
war, Soong worked to create South China as KMT’s last territorial base. (Courtesy T. V. Soong Papers,
Hoover Institution Archives)

T. V. Soong also turned to the Americans for help. Two months after
assuming his governorship, Soong wrote to Lester K. Little, American
inspector-general of the Chinese Customs Service, seeking ammunition with
the justification of improving the province’s anti-smuggling capability. An
inspired Little, who deemed Soong’s new appointment in Guangzhou as one
of the most “encouraging and significant developments since the end of the
war,” immediately wrote to John Leighton Stuart, urging the ambassador to
seriously consider rendering a loan or a gift of $2.5 million to support
Soong’s purchase of four vessels, wireless communications, and spare parts
for Customs ships in the Guangdong area.26 The American ambassador
politely rejected the idea, as he could not accept the inspector-general’s
“informal presentation,” and instead suggested to Little that he advise the
Nationalists to lodge their request with Washington. A persistent Little
immediately followed suit.27
From Nanjing, however, no official request for armaments for Soong was
presented to Washington, and the reason was not difficult to detect. Soong’s
unspoken idea was actually to create a paramilitary force at his own
disposal, free from the influence of regional cliques and militarists who were
constantly at odds with Chiang Kai-shek. Toward the end of 1947, the
obstinate Soong went out of his way to establish a separate “water police” in
Guangdong, thereby detaching the provincial marine security forces from the
Chinese navy, which was barely under Chiang Kai-shek’s control anyway.28
Soong’s attempt to create a military mechanism that was under his effective
command was also hindered by his American military advisers. They
strongly dissuaded him from his plan by arguing that from a purely military
and strategic point of view such a move would only generate “a very
awkward command structure” in the region’s military and security
establishments. Worse still, when Soong thought he could further dominate
the military in both Guangdong and Guangxi provinces by issuing orders in
his capacity as the Generalissimo’s representative in Guangzhou, his
American advisers informed him that in all honesty no high-ranking military
officers in the army and navy headquarters took his orders seriously.29
Notwithstanding these frustrations, from the early months of 1948 until he
resigned the governorship in early 1949, through personal channels from
abroad, T. V. Soong was able to acquire a considerable amount of
ammunition for his provincial garrison forces. In April 1948, without prior
consultation with Nanjing, Soong cabled General Jiang Biao, his longtime
associate and Nationalist China’s ammunition procurement representative in
Ottawa, Canada, to request six PA-11 planes and other related radio
facilities for his “smuggling suppression” in the South China Sea.30 In the
following months, Soong augmented his regional force by purchasing arms
through various connections such as the Bank of Canton in San Francisco, the
Canadian Commercial Corporation, the China Supply Agency in Ottawa,
Jiang Biao, and other international brokers, including a mysterious American
named Mr. Schroeder. These munitions, which included thousands of Bren
guns and pistols, over 10 million rounds of ammunition, and twenty tanks,
were shipped from Canada and European countries like Spain and Belgium
to Guangzhou via Hong Kong.31 The Hong Kong governor, Alexander
Grantham, hoping adjacent South China would remain a Communist-free
zone, wrote to Soong that he would be pleased to grant the necessary
facilities for the shipments.32
T. V. Soong was equally concerned about consolidating the province’s
economic stability and financial security. Just before his inauguration, an
agreement was signed between the Central Bank of China and the Hong Kong
government in which the Guangdong provincial authorities obtained promises
of cooperation from the British colonial authorities to suppress smuggling
between South China and Hong Kong. This agreement was designed to
ensure that tax revenues from Chinese exports via Hong Kong would come
into the hands of the Nationalist government and to secure the elimination of
the existing free markets in Hong Kong in U.S. dollars and Chinese
Nationalist currency.33 Shortly after assuming his new post in Guangzhou,
Soong endeavored to attract foreign investments for the province’s economic
development. In early 1948, despite the anti-British demonstrations in
Kowloon and other major cities in Guangdong, there was talk of a big British
project in the province. A new “Guangdong Iron and Steel Works Project”
was feverishly discussed, and Soong sought British cooperation in industrial
and other investment undertakings.34 Considering that their colonial interest
in Hong Kong was closely connected to the situation in Guangdong, it is not
surprising Whitehall policymakers seemed more cooperative than those in
any other country to work with Soong to bolster the economy in South China.
 At the same time, the United States was not exactly absent from Soong’s
efforts to build a Nationalist power base in southern China. In early 1948,
with the help of William Youngman, another important associate of T. V.
Soong from his wartime years, discussions got underway about the
participation of Morrison-Knudsen, one of the largest construction
companies in the United States, in developing the Chinese infrastructure.
Some of the grandiose projects discussed included the reconstruction of the
Guangzhou-Hankou railway, the building of a new railway connecting
Guangzhou with Southwest China, and the renovation of the Whampoa
harbor.35 In addition, Soong brought with him Nationalist premier Weng
Wenhao to endorse a cross-regional economic cooperation program to be
mounted by provincial authorities south of the Yangtze.
In the early summer of 1948, Soong somehow managed to bring together
governors from Hunan, Fujian, Taiwan, Jiangxi, and Guangxi in Guangzhou to
coordinate their actions in developing South China’s economy, finances, and
infrastructure. For a short time, this political feat, along with the spreading
news that the U.S. Congress would soon approve all-out aid to the
Nationalists, momentarily attracted hundreds of foreign investors who were
interested in areas under Soong’s control.36
Within the KMT power structure, however, the struggle over who should
be the real master of South China remained fierce. One of Soong’s strongest
competitors was General Zhang Fakui, a powerful Cantonese leftist militarist
who was Soong’s predecessor as head of Chiang Kai-shek’s field
headquarters in Guangdong. Zhang was not only bitterly opposed to Soong’s
control of the province’s military, but also disagreed with Soong over the
issue of including Hainan Island, where the Soong family came from, as part
of Guangzhou. Zhang advocated that, to reinforce South China as an effective
Communist-free region, it was imperative to detach Hainan from Guangdong
provincial jurisdiction. As Zhang saw it, establishing a new Hainan
provincial administration directly under Nationalist control and maintaining
an independent garrison command, separate from provincial authorities,
would both alleviate the burdens of Guangzhou and facilitate Communist
suppression activities on the island.37 According to Zhang, around May 1947,
Nanjing accepted his proposal and Chiang Kai-shek was ready to appoint
him as the first governor of the island.38
Zhang Fakui’s intension of making Hainan a province was met with strong
opposition by T. V. Soong, who, Zhang alleged, went to great lengths to
prevent Chiang from making Zhang the island’s new governor. Further,
Soong’s determination to bring the island into his own satrapy was
remarkable. Between late 1947 and the spring of 1948, Soong invited United
Nations Relief and Rehabilitation Administration staff and Japanese experts
to conduct a thorough investigation of Hainan’s economic and agricultural
conditions. Several small-scale industrial and fishery projects were also
under consideration.39 In early April 1948, at the invitation of Soong, John
Leighton Stuart and General David Barr, chief of the U.S. Military Advisory
Group in China, flew to Hainan to inspect the island. It was reported that the
establishment of a U.S. military base on the island was being carefully
considered, a rumor that soon invited Communist accusations that Soong was
about to sell out the island to the “evil American imperialists.”40
It was not until early 1949 that Hainan was eventually made a provincial-
level “special administrative district.” Just before Chiang Kai-shek stepped
down from the presidency and T. V. Soong resigned from the provincial
governorship, Zhang Fakui was nominated to be the first governor of the
island. At this juncture, the search for a final territorial base had become a
matter of life and death to the crumbling Nationalist authorities. Believing it
was too late to rescue the Nationalists from civil war, a less-confident Zhang
turned down the appointment.41 As will be shown later, the idea of turning
Hainan into an anti-Communist redoubt would revive after the Korean War
broke out, although by that time it was largely an American, rather than
Nationalist, initiative.
 CHINA’S DISINTEGRATION PERCEIVED

Between late 1947 and the fall of 1948, despite a deteriorating situation in
areas north of the Yangtze, T. V. Soong’s effort to consolidate the Nationalist
position in South China had achieved a certain degree of success. Chiang
Kai-shek noted in his diary in May 1948 that he was truly inspired by
Soong’s efforts in South China at a time when the situation in other parts of
China looked so gloomy.42 As late as January 1949, a report submitted to
Mao Zedong from the Communist Chinese Party (CCP) underground unit in
the Guangdong and Guangxi regions admitted that the Nationalist “banditry
suppression” in these two provinces was so effective that local Communist
guerrilla activities were badly checkmated and thus the guerrillas had had to
retreat into the mountain areas on the Guangxi-Vietnam border.43 In fact,
Soong’s success in purchasing as much ammunition as he could from abroad
for his regional forces was largely overshadowed by his difficulty in
enlisting enough local soldiers. Even so, the ill-equipped local Communist
irregulars were in an even weaker position to challenge the Nationalist
authorities and take over the whole region.44 On Hainan Island, for example,
between late 1948 and early 1949, the local Communist leader Feng Baiju
reported to Mao that the transfer of a considerable number of local
Nationalist troops to fight on the mainland had enabled the Communist
guerrillas to capture a few counties. But Feng also reckoned that Nationalist
control of Hainan remained steadfast and, in contrast to the Communist
victory on the mainland, he was never optimistic about an immediate
“liberation” of the island.45
The Nationalists’ endeavor to keep South China away from the ravages of
the civil war, together with a steady decline of their influence in areas north
of the Yangtze, led foreign diplomats and observers to predict that China
would gradually lose any hope of becoming a unitary state and instead
devolve into a number of separate regions, similar to the way it was in the
early years of the republic. The British were the first to suggest this. Several
weeks after Nanjing’s disastrous military defeat in Shandong in May 1947, a
top-secret memorandum from the British War Office in London, dated July 7,
concluded that the Nationalist central regime would soon lose its already
precarious hold on Manchuria, which could then become a Soviet puppet
state; North China seemed likely to come under Communist control as a
Chinese Communist state; South China and the western provinces might
establish their independence under regional warlords; Formosa might
become independent; and the threatened loss of territory to the Communists
might be a factor in intensifying Nationalist interest in China’s claims to
territories bordering Southwest China.46 Although officials from the Foreign
Office were more cautious about the predictions than their counterparts in the
War Office, a commonly held view now in Whitehall was that the Nationalist
government under Chiang Kai-shek could either be saved by an all-out
American aid, or be left alone to disintegrate. The current U.S. policy of
limited support for Chiang would achieve no result, but instead lead China to
return “to the days of native warlords.”47
Was such a return to “the days of native warlords” really what the British
wanted? To some American officials, the answer seemed to be yes. In the
summer of 1947, as Chiang Kai-shek was fighting to strengthen Nanjing’s
control over Guangdong, rumors began to circulate that the British were
implicitly encouraging a separatist movement in South China. This British-
instigated movement, some American diplomats in China alleged, was led by
a KMT left-wing general named Li Jishen, a native of Guangxi province who
was also a long-time rival of Chiang Kai-shek.48 Although there was no
strong evidence to support such a claim by the British, the American embassy
in Nanjing immediately instructed all American consular officers in China to
“quietly investigate the possibility of the development” of separatist
movements in each consular district.49
 By early 1948, important foreign representatives in China, including
American ambassador John Leighton Stuart, were inclined to believe that the
trend toward regionalism had become very real. In a series of analytical
reports cabled back to the State Department, Stuart posited that the decline of
the Nationalist authorities would lead to a breakup of China into regional and
loosely federated units. The deterioration of central authority would also
encourage the strongest men to carry on, each in his own territory, as
virtually independent entities. Stuart argued this breakup into smaller
regional units would have the advantage of more direct control of the local
administration and of rallying militia bands to protect their “home turfs” from
bandits or Communists. These federated units might also maintain a common
organization for foreign affairs. Stuart particularly raised the example of T. V.
Soong’s endeavor in Guangdong and Hainan as clear evidence that the
appearance of several anti-Communist regional blocs was a highly likely
development in China.50
Interestingly, U.S. military and intelligence establishments also shared
such a prediction. Sometime during the fall of 1947, the Intelligence Division
of the War Department went a step further by exploring the impact of the
development of regional divisions in China and the concomitant
disintegration of the Nationalist government authority on the Nationalist army
and thereby on the possible outcome of the Chinese civil war.51 In a research
report issued in November 1947, the still nascent CIA estimated that
“secession tendencies” were now prevailing in both the northern and
southern peripheries of China. In the North, the de facto independence of
Outer Mongolia in early 1946 had generated a potent example for other
ethnic minority groups who were subsequently inspired to carve out their
own political territories from the Nationalist center. In South China,
President Truman’s intelligence analysts watched T. V. Soong’s efforts to
convert agricultural South China into a territorial fortress that would be self-
sufficient and defensible from Communist attacks. But unlike the U.S.
Embassy in Nanjing, which had predicted Soong would be the leader of the
South China region, the CIA thought two other powerful regional militarists,
Li Jishen and Zhang Fakui, would be the most likely leading figures in such a
separatist movement.52
By mid-1948, overall developments in China had led American officials,
both civil and military, to agree that the gradual creation of new territorial
divisions, coupled with the emergence of their concomitant local authorities,
was the most likely scenario in war-torn China. Therefore, to the United
States, taking prompt and decisive measures to cope with such a
development stood out as a matter of urgency.53 Not surprisingly, American
consular personnel and secret agents everywhere in China were busy
building close contacts with political and military figures of various sorts
who were perceived to be potential leaders of future anti-Communist
campaigns and, therefore, ultimately of the new political units. In Inner
Mongolia, for example, a mysterious Frank B. Bessac, allegedly a CIA agent,
was actively engaged in secret communications with Prince
Demchugdongrob (De Wang), the most prominent name of the Inner
Mongols.54 Using the opportune timing of the convention of the National
Assembly in Nanjing in May 1948, American embassy staff covertly
approached several key ethnic politicians coming from that part of China.
Ningxia provincial governor Ma Hongkui recalled that when staying in
Nanjing, he was unexpectedly invited for a private dinner at John Leighton
Stuart’s residence, where the ambassador was eager to gain firsthand
information on Inner Mongolia. Stuart informed Ma that Washington was
willing to assist his provincial regime militarily and economically if Ma
carried on an anti-Communist stance in his territorial domain. Stuart also
revealed that several other Nationalist military leaders, such as the Suiyuan
provincial governor Fu Zuoyi, had agreed to collaborate with the United
States.55
 In Urumqi, American Vice Consul (and CIA agent) Douglas Mackiernan
was busy fostering new anti-Communist connections with local ethnic
minority figures in China’s far west, notably Osman Batur, a well-known
leader of local Kazakhs.56 In March and April 1948, J. Hall Paxton,
Mackiernan’s nominal superior at the consulate, conducted a thorough
inspection tour of Xinjiang, where he underscored the strength and goodwill
of the United States toward the local minority peoples, while at the same
time he searched for potential candidates for future cooperation.57 In October
1948, a list of possible recipients of American aid in China’s western
frontier then still beyond the Communists’ reach was submitted to the U.S.
Embassy in Nanjing. Noticeable names on the list included figures from the
famous Ma Muslim family in Northwest China: Ma Hongkui in Ningxia, Ma
Bufang in Qinghai, Ma Jiyuan in Gansu Corridor, and Ma Chengxiang in
Xinjiang. With the Nationalists seemingly on the losing side of the civil war,
Stuart brooked no delaying in urging Washington to render immediate
assistance to these regional leaders and their forces to keep away the
Communist threat.58
 THE GENERALISSIMO STEPS DOWN

Within this strategic framework, with the inevitability of a disintegrated and

regionally based China was perceived with alarm by the Americans, a new
Taiwan formula began to take shape within high U.S. political and military
circles. It was generally agreed in Washington that, as China would very
likely return to localized politics, American support should henceforth be
given to “regional groups or individuals capable of fighting with the
Communists,” rather than provided to a precarious and inept Nationalist
central authority in Nanjing.59 To fulfill this goal, targeting the man to lead
each potential regional regime was imperative. Given this new policy,
compared to what had been done in the outlying territories of China’s north
and northwest, the actions undertaken with regard to Taiwan came relatively
slowly. In Taipei, U.S. Consular staff on the island had done little more since
mid-1947 than promote the picture of America as the world’s foremost
champion of liberty, democracy, and minority rights. Yet, such propaganda
only invited bitter criticism from local Nationalist-controlled mass media,
which accused the Americans of attempting to further “tighten their hold on
Taiwan and turn the island into a new colony of their own.”60 In fact,
criticism of the United States by the Nationalist mass media grew to such an
extent that, in early December 1947, the State Department had to clear the air
by stating that both Washington and Nanjing were in complete accord over
the issue of Taiwan’s future and that any statements to the contrary were but
the opinions of individuals.61
While the British and American governments were concluding that China
would soon dissolve into several smaller territorial regimes, Taiwanese
elites who favored political independence for Taiwan were busy warning
that with the likely collapse of the Nationalist government, American military
forces would soon occupy the island.62 In the meantime, American consular
officials in Taipei, like their counterparts in other consular posts in China,
began developing “exploratory thoughts” on Taiwan, should the situation
further deteriorate on the mainland. As to what measures should be taken if
the Communists advanced into South China and threatened the island’s
security, no agreement could be reached between the Defense and State
departments even up to the end of 1948. General MacArthur and his staff in
SCAP headquarters emphatically underscored the danger of permitting
communist or other anti-Western groups to come into power on Taiwan and
thereby rupture the U.S. defense line in the Far East. And yet, implementation
of such a policy presented significant problems, in particular, who, for
example, should lead the island in the absence of Chiang Kai-shek? What
would the U.S. position be should the current provincial governor, Wei
Daoming, or General Sun Liren declare autonomy, or ask to be taken under
the wing of the United Nations upon Chiang’s downfall? No definite answers
to these possibilities were arrived at either in Tokyo or in Washington.63
On the other hand, things were worsening day by day on the Chinese
mainland. In mid-September 1948, the Chinese Communists captured Jinan,
the provincial capital of Shandong and the first big metropolis south of the
Great Wall to be lost permanently to the Chinese Communists. In Jinan, the
majority of the demoralized Nationalist garrison had refused to fight, and
some actually defected, a clear sign to some foreign observers that the
demise of the Nationalist military presence in North China, and ultimately in
all of China, was a foregone conclusion.64 The transformation from a
sustained defense to defection and surrender that occurred at Jinan was
repeated several times over during the final stages of the civil war. This
undoubtedly helped speed up the timetable for destruction of the Nationalist
forces, which occurred between late 1948 and the end of January 1949, when
the Communists launched a coordinated general offensive against three major
concentrations of Nationalist armies: the Liaoxi-Shenyang (Mukden)
campaign, from September 12 to November 21, 1948, which ended in the
complete defeat of the Nationalist armies in Manchuria; the Peking-Tianjin
campaign, from November 21 to January 31, 1949, which ended Nationalist
resistance in North China; and the Huai-Hai campaign, between November 6
and January 10, which removed the last major obstacle for the Communist
march southward of the Yangtze Valley and beyond.65
Elsewhere, Harry Truman was re-elected president of the United States by
the narrowest of margins (up to that time) in American history on the same
day that Shenyang fell to the Communists. For Chiang Kai-shek and his close
associates, Truman’s election was as big a setback as their military disasters
in Manchuria. They had hoped that the relationship between the Nationalists
and the United States under a Republican administration would signal a
return to the kind of close alliance they had experienced during World War II.
The Republicans, Chiang felt, were more likely to see the threat posed to
both America and China by the Communists and therefore be more willing to
counteract it, even at the risk of an all-out war. On the other hand, with
Truman and the Democrats, Chiang felt there would be little more than empty
phrases. In the last week of November, Chiang and his wife felt so hard-
pressed by the extremely adverse situation that he described the two of them
in his diary as being trapped in “living death.”66 To rescue Nationalist China
from its final breakdown, Madame Chiang decided to fly to Washington to
make one last-ditch effort to seek aid from Truman and George Marshall, an
idea that her husband sniffed at as unnecessary, stating that it would only
cause humiliation.67 Chiang tried in vain to dissuade his wife from going, but
she left Shanghai for the United States on November 28, 1948.68
Madame Chiang’s visit to Washington, as it turned out, did little good to
save either the Nationalist government or her husband’s political career.
Beginning in early December 1948 the United States began to put pressure on
Chiang Kai-shek to step down. Since the end of the Marshall mission, the
Truman administration had been edging back from Chiang to avoid being
trapped in the wreckage of his impending defeat. If Chiang’s removal could
bring the Nationalists and the Communists to the negotiation table, thus
stopping the Communists at the Yangtze, it seemed from Washington’s
viewpoint there was no reason why he should stay on, and, indeed, that it
might be helpful to all if he were taken out of the picture altogether and
someone else given a chance to try.69 This message was informally spread to
higher authorities in Nanjing and by Fu Jingbo, the adopted son of John
Leighton Stuart who was also a special assistant to the ambassador. Fu’s
action incurred the wrath of Chiang, causing the latter to disparage the
American embassy as responsible for his overthrow.70
Inspired by the way the Americans were putting distance between
themselves and Chiang, the Guangxi Clique, represented by Vice President Li
Zongren, began forcefully pressing for Chiang’s resignation using various
excuses, particularly blaming him for the recent military defeat in North and
Northeast China. Believing that the United States was now backing them, key
elements of the clique openly expressed their great hope in the proposed
peace negotiation with Mao Zedong that Chiang would step down.
Meanwhile, movements against Chiang were growing stronger in provinces
south of the Yangtze. In the final week of December 1948, politicians in
Guangxi and Hunan provinces went so far as to publicly advocate for Chiang
to retire as early as possible so as not to hamper the Nationalists’ “long-
awaited” peace negotiations with the Communists.71
Two crucial events occurring at this juncture pushed a stubborn Chiang
Kai-shek, who would otherwise refuse to yield to domestic and diplomatic
pressure, to consider retreating from the political scene. The first was the
election of the president of the Legislative Yuan, a move that only deepened
the fractures in the KMT party. Chiang favored party nominee Li Peiji, a core
member from the CC Clique who was staunchly rightwing and strongly
opposed to Li Zongren’s peace overture with the Communists. Other major
factions within the KMT, including the Political Science Clique, the Youth
Corps, and regional cliques, instead supported Tong Guanxian, and Li lost
the election on December 24. Chiang, of course, was humiliated and
maddened. The implication, moreover, was that the party apparatus was now
completely out of his control, and his anti-Communist stance gained little
support more than the extreme-rightist CC Clique.72
On the day after the Legislative Yuan election, Chiang Kai-shek learned
that his instructions to the Chinese Navy a week before to transfer the
Nationalist 2nd Army stationed in Sichuan eastward, where it could
safeguard the Lower Yangtze Delta, were categorically opposed by General
Bai Chongxi. Disagreeing with Chiang’s intended troop maneuver, Bai
instead ordered the interception of the navy warships carrying the troops in
Wuhan, where the Guangxi general’s Central China Bandit Suppression
Headquarters was located. Realizing now that the strategically critical
Central China front was in the hands of General Bai and his Guangxi armies,
Chiang backed down and humbly withdrew his earlier instructions.73
With his political and military power rapidly slipping away, Chiang’s
retreat from the political arena became inevitable. On January 14, 1949, Mao
Zedong issued his conditions for peace, a harsh “eight-point proposal” which
demanded, among other things, that Chiang Kai-shek be put on trial as a war
criminal, the Nationalist armed forces be integrated into the PLA, and the
Nationalist government be abolished. Chiang refused to accept these
conditions, and on January 21 “retired” (yintui) from the presidency. Li
Zongren succeeded him as acting president and opened formal peace
negotiations with the CCP.74 At the turn of 1949, as looming crises were
threatening his political career and even the regime he had led, Chiang
encountered his gravest critical juncture since the end of World War II.
Whatever decisions he would make or dismiss, and whatever actions he
would take or drop, would generate strong repercussions in the development
of China’s political landscape, creating far-reaching impacts on the fate of
Taiwan.
 LIVINGSTON MERCHANT GOES TO TAIWAN

With Chiang ostensibly out of the way, Washington revealed its determination
to prevent Taiwan from falling into Communist hands. For the American
policy planners, finding potential regional leaders and/or governing groups
to deal with, and thereby to secure American interests in a China without a
strongman such as Chiang, was paramount. A National Security Council
paper in early January 1949 (NSC 34/1) articulated the American aim “in a
chaotic China” was to “prevent it from becoming an adjunct of Soviet
power.” In pursuing this goal, top strategists in Washington felt it important to
devise appropriate plans and to make timely preparations to exploit
opportunities in all regions of China, while at the same time maintaining
flexibility and avoiding irrevocable commitments to any one course of action
or to any one faction.75 As a result, at least for the time being, it was not
entirely unreasonable that the strategists thought Northwest China under
General Zhang Zhizhong and the Ma Muslims, and Sichuan, Yunnan, and
Guizhou provinces in the southwest under their respective provincial
leaders, might remain safe and secure from the Chinese Communists.76
In South China, most of which was free from immediate Communist
threats, T. V. Soong remained at the top of the list of leaders in whom
Washington had great hopes, and the reason is not difficult to discern. Since
early 1948, Soong had been in contact with Li Jishen and other anti-Chiang
Kai-shek politicians from the Guangdong Clique to determine how and where
they could collaborate to secure a noncommunist South China. Presumably
with tacit permission from Chiang, Soong at one point was engaged in
incorporating as many dissident Nationalist regional politicians and
militarists as possible into his provincial administration. By so doing, Soong
sought to expand the social-political base of what appeared to be the KMT’s
last stronghold in South China, which would now encompass various factions
and cliques.77 On the eve of Chiang’s retirement, James Brennan, Soong’s
contact in Washington, informed him that because of Soong’s outwardly
liberal image, the U.S. government would “work out with strong adherents
here” how to save this region, a goal that was “essential to U.S. interests.”
Brennan further stated that powerful elements in Washington’s military
circles were working on “another AVG [American Volunteer Group]
operation to help gain time [to] organize the Yangtze line,” adding that in
every important discussion Soong was the most respected Chinese leader, of
whom the “most is hoped.”78
On December 29, 1948, three weeks before his retirement, Chiang Kai-
shek appointed General Chen Cheng as the new provincial governor of
Taiwan. A loyal subordinate and comrade of Chiang since the mid-1920s,
Chen was regarded by the American consular staff in Taipei as one of the
few generals in whom Chiang had complete and absolute trust, and so it was
assumed his appointment to Taiwan indicated Chiang’s plan to make the
island his home base.79 Such speculation grew during the first weeks of
January 1949 when Chiang Ching-kuo was asked by his father to take charge
of the KMT party mechanism on the island. In addition, various American
intelligence sources around this time indicated that Chiang had secretly
managed to transfer the government’s gold and silver, and foreign exchange
reserves worth $506 million in total, out of Shanghai. Although their exact
destination was unknown, Taiwan was considered to be the most likely.80
Whether Chiang Kai-shek had long designated Taiwan as his last
territorial refuge, as most experts on modern Chinese history maintain, is a
question that remains open to debate.81 On January 17, 1949, Chiang wrote to
his wife in the United States, informing her of his imminent resignation.
Meanwhile, Chiang stressed that the central government “will not be moved
to Taipei, nor was he planning to go there.”82 Madame Chiang, still
struggling to lobby for possible U.S. aid to prolong the Nationalist regime in
its eleventh hour, strongly disagreed with her husband’s decision. Instead,
she repeatedly urged Chiang that if he believed the safety of Nanjing was
now in serious question, then he should move the Nationalist power base
either to Taiwan or to Guangdong so as to continue the fight against the
Communists.83 Her advice fell on deaf ears, as at this juncture Chiang still
seemed quite optimistic about making an effective defense south of the
Yangtze.84 In addition, by early 1949, despite the Communist lack of
amphibious capacity, for Chiang and many of his core followers, considering
the scarcity of natural resources and the possible defections and subversion
from within the local Nationalist apparatus, Taiwan did not appear to be
safer, either politically, economically, or militarily, than Guangdong or other
southern provinces on the mainland.85
Nevertheless, to many outsiders, as Chiang’s resignation loomed toward
the end of 1948, he seemed to have chosen Taiwan as one possible territorial
refuge.86 Seeing that Chiang’s influence now began stretching to Taiwan,
officials in Washington tended to believe that the island would inevitably be
embroiled in China’s civil war. In early February 1949, trans-departmental
discussions on the U.S. position toward Taiwan were heatedly underway in a
National Security Council session.87 In the end, the State Department and
Defense Department chiefs both recognized Taiwan’s strategic importance,
and thus Washington decided it should seek to develop and support a local
non-Communist Chinese regime that would provide “at least a modicum of
decent government for the island.” It was also agreed that the United States
should “seek discreetly to maintain contact with potential native Taiwanese
leaders” with a view to being able to make use of a “Formosan autonomous
movement” should it appear at some future date to be in the U.S. national
interest to do so.88 They also reached consensus on a telling reality: If and
when a Chinese coalition government was formed between Li Zongren and
Mao Zedong, Taiwan would be governed by a Chinese central government
jointly run by the Communists. Washington concluded that it was urgent to do
something to prevent the island from being taken over by the Communists.89
 The Joint Chiefs of Staff strongly opposed an overt military commitment
in Taiwan as the disparity between the U.S. military strength and its global
obligations made the employment of any armed force on the island next to
impossible. Nevertheless, they agreed that “some form of military support”
should be made available to assist the vigorous implementation of
Washington’s diplomatic and economic policy for “developing and
supporting a non-Communist regime in Taiwan.” In conclusion, the military
establishment urged the State Department to strengthen and increase its
diplomatic representation on Taiwan and immediately send a high-ranking
officer to Taipei, to approach the governor of Taiwan along those lines. After
the governor agreed to cooperate with the United States, Washington would
render economic and technical support designed to maintain a viable and
self-supporting economy on the island.90
Dean Acheson, Truman’s new secretary of state, who hitherto knew little
about the situation in Asia, green-lighted the implementation of the
aforementioned policy. It was within this context of a newly formulated
strategy toward Taiwan that the mission of Livingston Merchant was carried
out. Merchant was not one of the State Department’s China hands. From 1945
to 1948 he had served as an economic advisor in the U.S. Embassy in Paris,
and his first assignment in China was as counselor of the American embassy
in Nanjing. Still, he was dispatched as that very “high-ranking officer” to
Taiwan in accordance with the policies set forth in Washington. By the last
week of February 1949, Merchant was already in Taiwan, where several
other U.S. military and economic officials were also visiting.91 His task was
twofold. First, he would investigate the political situation on Taiwan,
determine who was running the island, and assess whether that leader would
be able to provide at least “a modicum of decent government” and be willing
to cooperate with Washington. Second, he would assess the Taiwanese
independence movement, which was reported to be active on the island.92
 While in Taipei, Merchant initially planned to meet with Chen Cheng and
pass on Washington’s messages to him. However, at the last minute, Merchant
avoided approaching the governor, whom he portrayed as seriously lacking
the political abilities that the island administration needed. Instead, on March
6, 1949, Merchant cabled Dean Acheson, recommending that the State
Department instruct Ambassador Stuart to encourage Acting President Li
Zongren to replace Chen with General Sun Liren as soon as possible.93
David Finkelstein argues that Merchant thought it unwise to approach Chen
because Chen’s governorship was insecure at this moment.94 This is
probably true, although it was more likely that Merchant had been deeply
influenced by his close associates at the Economic Cooperation
Administration (ECA) mission in China, who almost unanimously disliked
Chiang Kai-shek. Chen Cheng, having been labeled as Chiang’s man, thus
became a scapegoat.95 Another reason for this last-minute change of attitude
was quite obvious: Just a few days before Merchant’s arrival in Taiwan,
General MacArthur invited Sun to visit Tokyo for a personal meeting. A
SCAP chartered plane was specially arranged to carry Sun and his entourage
between Taiwan and Japan. The signal seemed clear: It was Sun, rather than
Chen, who was SCAP’s favorite on the island.96
Dean Acheson had no doubt about Sun Liren’s integrity, capability, and
disposition toward the United States, but he nevertheless worried about
Sun’s lack of administrative experience.97 In response to the secretary of
state’s doubts, Merchant emphasized that Sun possessed the political courage
and ideal nature for Taiwan’s governorship, as he was effective and liberal,
and more crucially, Sun was a maverick “not so bound to Chiang Kai-shek”
as to permit Chiang to turn Taiwan into his private island citadel if the
Communists ultimately occupied the entire mainland. With such a possibility
looming large, Merchant strongly suggested that no economic aid project be
granted until Chen Cheng was replaced.98
 Livingston Merchant, certainly not a China expert, knew much less about
Chinese Nationalist politics than he pretended, and his observation and
conclusion might not be entirely accurate; but his assessment was fair enough
to create a stir in Taiwan’s military and political circles. Extremely insecure
about his position in Taiwan, in late March 1949, Chen Cheng rushed to meet
Chiang Kai-shek in Xikou, the Generalissimo’s hometown in Zhejiang
Province, and detailed the “ongoing American intrigues” surrounding
Taiwan.99 In early April, Sun Liren, whom Merchant deemed as “not so
bound to Chiang,” also flew to Xikou to meet with Chiang. Fully aware that
Sun was now unmistakably the Americans’ preference, Chiang reportedly
showed him the special courtesy of accompanying him quite some distance
from the house when Sun left. Chiang also encouraged Sun to go back to
Taiwan and continue training the Nationalist army.
Shortly after Sun’s visit to Xikou, an anxious Li Zongren advised John
Leighton Stuart that if the United States genuinely believed Sun was a better
choice than Chen to govern Taiwan, Washington should negotiate with Chiang
for a new arrangement. Li thought it useful for the Americans to approach Wu
Zhongxin, a KMT veteran who admired Sun and had Chiang’s confidence. In
the eyes of the Guangxi Clique, it was evident that Chiang had endorsed Sun,
whose appointment as Taiwan’s new governor might attract support from
both the United States and different factions within the KMT. Given Chen
Cheng’s unique ties with Chiang, Stuart found it reasonable to argue that a
Taiwan under Sun would be in the interest of the Nationalist authorities now
headed by Li Zongren.100
By the spring of 1949, Merchant’s recommendation of not approaching
Chen Cheng, thus indicating the cultivation of Sun Liren, seemed to have
generally become a consensus both in Washington and the SCAP
Headquarters in Tokyo.101 “If he [Sun] accepts, we shall have made a major
military gain in dividing the Chinese forces now on the island,” as one piece
of the State Department draft memorandum optimistically predicted, and
“Chiang Kai-shek will be accorded the status of a political refugee.”102
However, the Chinese Nationalist political landscape was far more
complicated than officials in the American embassy in Nanjing or in
Washington could have visualized, and Chen Cheng’s political fortune was
not yet sealed. The relationship between Chen Cheng, who still was at the
helm on the island, and his professed mentor Chiang Kai-shek, was not as
harmonious and intimate as outsiders would have perceived, a fact that the
Americans would soon come to realize. As long as Chen remained strong on
the island, he would have the support of some American strategists. Several
key policies that Chen undertook in the months after Merchant’s tour in
Taiwan clearly demonstrated that it was Chen, not Sun or anyone else, who
played a major role in directing the island’s future. On the other hand, it was
America’s professed intention to back Sun Liren as an ideal military leader
in Taiwan (and K. C. Wu, a Princeton graduate, as a possible political leader
on the island), which would mean a tragedy for Sun, the talented yet
politically naïve Virginia graduate, in the decades to come.
 4
Chiang Kai-shek in Eclipse

BEFORE TAKING HIS leave of the presidency on January 21, 1949, Chiang Kai-
shek undertook a series of political and personnel arrangements that made his
retirement indeed resemble a mere temporary expediency. In addition to
anointing his Whampoa subordinate Chen Cheng as Taiwan’s new governor
as a way to consolidate the island rear, Chiang also placed several of his
trustworthy associates in key positions in areas south of the Yangtze. Zhang
Qun and Zhu Shaoliang, his two fellow students back in the early Japan
years, were made directors of the bandit suppression headquarters in
Chongqing and Fuzhou, respectively, positions which gave them legal
authority to command the local military in the southwest and southeast; Tang
Enbo, another of Chiang’s trusted military subordinates who also shared the
same Japanese military educational background, was entrusted to command
the Nationalist garrison forces in the critical great Nanjing-Shanghai-
Hangzhou area and was made responsible for the Yangtze defense line; and
Yu Hanmou, a Cantonese militarist who in 1936 decisively sided with
Chiang, thus quietening an anti-Chiang rebellion by the Guangdong and
Guangxi cliques, was assigned the task of heading the military in Guangdong
and Hainan Island.1
While placing confidants in crucial posts south of the Yangtze, Chiang lost
no time in moving national reserves from the Bank of China treasury in
Shanghai to such relatively safer places in the south as Amoy, Keelung, and
Guangzhou.2 Recent research by Wu Xingyong, the son of Wu Songqing, head
of the Budget and Finance Directorate of the Nationalist Combined Services
who was deeply engaged in Chiang’s secret business dealings, reveals that
the total treasuries, including gold, silver, and foreign exchanges, transferred
out of Shanghai between December 1948 and May 1949, amounted to 4
million taels (about 6.43 million ounces) of gold, equivalent to $500
million.3 Another secret transference to Guangzhou of 3 million silver coins
then stored in Wuhan was attempted, but it was intercepted by Bai Chongxi,
who apparently tried to place this piece of the treasury under his own control
so as to stabilize the financial conditions in Central China.4 Chiang would
later use the bullion and foreign notes at his disposal to launch Taiwan’s
financial reforms and stabilize Taiwan’s new currency, to pay for those army
divisions still struggling with the Communists on the mainland, and to
prepare for his return to power.
Meanwhile, Chiang Kai-shek allowed no delay in summoning southern
provincial governors for personal meetings. In early January 1949, governors
of Yunnan, Guizhou, and Sichuan provinces flew to Nanjing, where Chiang
was eager to secure their political allegiance and, hopefully, their
unswerving anti-Communist stance.5 After announcing his resignation,
Chiang, still holding the title as head of the KMT party, returned to his “little
Western-style house” at his home hamlet in Xikou, Zhejiang Province. At
Xikou, Chiang established several wireless radio stations, through which he
continued to monitor and remotely control military, political, and party
affairs in the areas held by the Nationalists. Within three months of his
“retirement,” Chiang received more than a hundred important Nationalist
civil and military officials, to whom he was relentless in offering his
“personal and informal” advice on almost every outstanding issue.6
Despite Chiang Kai-shek’s professed retreat from the public scene, the
prospect of Nationalist rule in China remained uncertain. The Nationalist
authorities under Li Zongren, who had the backing of General Bai Chongxi
and his half-million troops deployed in Central China, seemed momentarily
confident about an effective management of a new political landscape in
Chiang’s absence.7 In late January 1949, Bai made known to John Leighton
Stuart that he would endeavor to create an anti-Communist bloc through an
alliance with the Muslim leaders in the far northwest and regional militarists
in the south and southwest. The Guangxi general told the American
ambassador both he and Li were confident that, with the peace negotiations
with the CCP imminent, these regional leaders could be expected to form a
new political bloc, as they were “already seeking means to cast off
affiliations with Chiang Kai-shek.”8
Yet the American ambassador doubted that Chiang’s withdrawal from the
scene was genuine, and that Li’s legal authority within the Nationalist
government had the scope he claimed. Realistically speaking, as the Guangxi
Clique was forming an anti-Communist political confederation that included
anti-Chiang elements, a fierce struggle between Chiang and Li over their
future respective base areas in the gradually shrinking and endangered
Nationalist territorial domain was unavoidable.9 In his personal memoir, Li
detailed his original scheme to secure a southwest territorial citadel in case
negotiations with Mao Zedong ultimately failed. According to Li, if in the
worst case scenario the PLA crossed the Yangtze, he would order the
abandonment of Nanjing and Shanghai, and utilize Bai’s 400,000 army troops
then deployed in Central China, along with Tang Enbo’s 300,000 forces that
were expected to retreat from the great Shanghai area to the Zhejiang-Jiangxi
border, to prevent a Communist march southwestward. To put it in a nutshell,
Li ideally deemed it practicable to preserve a vast territorial base in South
and Southwest China, so long as the defense line, running from Wuhan, along
the Zhejiang-Jiangxi railway, down to Swatow in eastern Guangdong, could
be consolidated.10
The “retired” Chiang Kai-shek and his die-heart adherents harbored a
very different view of Communist encroachment, and as a result, a rather
different strategic landscape emerged. Back in June 1948, Chiang had a very
private discussion with General Zhang Zhizhong, a trustworthy, erstwhile
Whampoa fellow subordinate who was then director of the Generalissimo’s
field headquarters in Northwest China. Since the spring of 1946 when he was
made governor of Xinjiang, Zhang had advocated a rather leftist policy in
that province. Now Zhang urged Chiang to adopt a pro-Soviet policy, thus
solving the Communist issue and preventing the trouble-laden government
from being dragged deeper into the civil war. If Chiang found it hard to patch
up with Moscow right away, Zhang argued that the Chinese Nationalist
foreign policy should at least place Soviet Russia and the United States on
the same scale, rather than tilt entirely toward Washington, a move which
Zhang viewed as “dangerously hopeless.” As Zhang saw it, only through a
shift toward Moscow could Chiang and the Nationalist government rescue a
worsening situation in China.11
At the time of the Chiang-Zhang meeting, Northwest China remained
virtually free of any CCP threat, and a large part of the government forces
were under the command of the Ma Muslims and specifically, General Hu
Zongnan, another favorite of Chiang. Thus, Zhang’s seemingly wild idea was
not entirely unrealistic to Chiang. For a period around June 1948, Chiang
was carefully weighing the situation in the far northwest. He summoned key
Ma Muslim figures in that region to Nanjing for personal consultations,
hoping to work out the best strategy.12 In his final analysis, however, Chiang
dismissed the idea of making Northwest China his last territorial bastion. Up
to that point, Chiang also dismissed the idea of using the defensible,
resource-rich southwestern provinces as a potential power base against his
enemy, a practice he had applied when fighting the Japanese between 1937
and 1945. Instead of turning northwestward and establishing a power base
there, for which a pro-Moscow foreign policy stance was a precondition,
Chiang now dwelled on the idea of creating his future anti-Communist
redoubts along China’s southeastern coast, thereby reconfirming his ongoing
approach of turning eastward to seek assistance from the United States,
including the SCAP in Tokyo.13
Although later developments on the mainland and on Taiwan would force
Chiang Kai-shek to reconsider and change his strategy, by the time he stepped
down in early 1949, Chiang’s group felt an urgent need to strengthen control
over the southeast and south coast. To build a lasting stronghold against the
Chinese Communists, Chiang had a “strategic triangle” in mind. Tang Enbo’s
appointment clearly demonstrated Chiang’s desire to hold the lower Yangtze
Valley and to prevent the PLA from crossing the river in the event that the
peace talks broke off. However, expecting that Li Zongren would eventually
abandon Nanjing and withdraw southward, Chiang formulated a strategy
aimed at defending the Fujian-Guangdong-Taiwan territorial triangle and
turning it into an effective regional citadel.14 To thwart any Communist
advance into this territorial triangle, Chiang immersed himself in studying
guerrilla warfare in the mountain areas bordering Zhejiang, Jiangxi, and
Fujian provinces, as well as military operations from the islands off Zhejiang
and Fujian provinces.15
To safeguard this strategic triangle in Southeast China, in the early months
of 1949, a new harbor and an airfield were constructed on the Zhoushan
Islands off Zhejiang. While Li Zongren’s intention was to throw Tang’s
garrison forces into the defense of the Hunan-Jiangxi border, Chiang’s was to
use the Zhoushan isles as a crucial base, to which Tang’s men could be
evacuated and from which they could defend China’s southeastern coast. As
it turned out, when Shanghai fell in late May 1949, Tang’s troops were
indeed transferred to Zhoushan, from where they were subsequently deployed
southeastward to defend Fujian and Taiwan.16
 SAFE HAVEN OR PERILOUS REFUGE?

Chiang Kai-shek’s move to integrate Taiwan into his anti-Communist

triangular fortress in southern China generated a grave concern to the United
States. General David Barr, chief of the U.S. Military Advisory Group in
China, could not believe that Chiang would abandon the whole mainland and
develop Taiwan, when provinces in the far northwest and south of the
Yangtze were still intact and Taiwan’s legal status remained questionable.17
Roger D. Lapham, chief of the ECA mission to China, who played a weighty
role in planning America’s aid policy toward China, was so annoyed at
Chiang’s ambition for Taiwan that he suggested Washington provide no
capital expenditures to the island unless the United States was fully prepared
“to go to the limit” in protecting such expenditures from being capitalized
upon by Chiang. Lapham meanwhile advocated that Washington exercise its
influence to prevent “further exploitation of the island by the mainland
people,” who he thought would make the island “a Chinese military base to
operate against the Communists on the mainland.”18 On March 10, 1949, in
his personal memorandum to Dean Acheson, Lapham reemphasized the
necessity of keeping Taiwan from becoming a “KMT reactionary
stronghold.” In other words, Lapham was deeply convinced that a Taiwan
governed by local Taiwanese, not Chinese mainlanders, would best serve
Americans’ interest in the Far East.19
George H. Kerr, now a professor at the University of Washington but still
occasionally instrumental in Washington’s military intelligence circle, was
angry that no actions were taken to stop Chiang Kai-shek from going to
Taiwan. When approached by the State and Defense departments for advice,
Kerr repeated his early theory that if the United States attempted to support
the “ragtag and bobtail refugee KMT government” on the island, the six
million local people would ultimately turn to the Communists as their last
chance. Unseating the KMT there, Kerr declared, was the most imperative
issue. He advocated unreservedly that a puppet regime of native islanders
would be far more effective in an American program than a puppet
government by exiled mainlanders, “who were hated by the Formosans and
hounded by the mainland Communists.”20 Kerr’s views were soon absorbed
by Washington’s intelligence establishment. In a research report issued in
March 1949, the CIA specified that American inactivity would lead Taiwan
to eventually pass into the control of the Chinese Communists. The report
argued in line with Kerr’s idea that even some moderate course of action
might produce results beneficial to American interests, leading to a
strengthened will to resist communism in Japan, Korea, the Philippines, and
elsewhere throughout the Far East, including the southeast coastal areas of
China.21
Chiang Kai-shek probably found it difficult to swallow the fact that his
once-staunch American allies might now stand in the way of his efforts to
bring Taiwan under his sway. Livingston Merchant was sent to Taiwan to
verify local conditions, while the State and Defense departments in
Washington began discussing the best way to secure their interests on the
island. Officials from both departments reckoned that, for the time being,
only political and diplomatic means should be applied to do something to
benefit the people of Taiwan. At this point, two probable courses emerged to
meet such an end. Washington could either hold a plebiscite for the island’s
trusteeship under the United Nations or SCAP, or take “calculated risk” and
depend on political or diplomatic maneuvering to secure the real support and
cooperation of the Nationalist local administration.22
General Sun Liren obviously was the top of the candidates for whom
Washington had high expectations. By all accounts, for virtually all
Americans who had contact with the Nationalists, Sun was “the most
outstanding Chinese military leader.” General MacArthur in later years
would state that he knew very well that this “able and gallant officer who
graduated from our own VMI” was “no small matter” to the Far East
commander or the general’s chief of staff Ned Almond, who was also a
fellow graduate of the Virginia Military Institute. They cited Sun as evidence
that the Nationalists could be “a formidable force” if provided with
sufficient support.23
As Virginia connections entered SCAP calculations, as already seen, on
February 10, 1949, Sun meet with MacArthur to explore “the most urgent
need” for anti-communist efforts and the possible implementation of “a
radical reform of our psychology and ways of doing things—in political as
well as military fields.”24 The meeting is interesting for what it tells us about
Sun at this point. Ostensibly still asserting his personal loyalty to Chiang, Sun
nevertheless was being honest with MacArthur about his ideas on anti-
communism, democracy, and the creation of a “Free Province” in Taiwan. In
a bold and yet inappropriate manner in terms of his position as a mere
Nationalist military general, Sun emphasized the necessity for “a
regeneration of political souls” when carrying out the aforementioned goals.
Despite a gloomy situation on the mainland, Sun claimed aloud that it was
never too late for the United States to help China. After returning to Taiwan,
Sun further expressed his expectations of receiving “encouragement” and
advice from the United States. He was convinced that with “hard work and
fair means,” he would be able to contribute to “a worthy cause” in the near
future.25
After his extraordinary visit, Sun remained in close contact with the
American consular officials and military attachés in Taipei, with whom he
usually discussed firsthand information about the island. In May 1949, in a
private conversation with American Consul-General Donald Edgar, Sun
bitterly complained that Chen Cheng was trying every possible way to shelve
him in favor of Chen’s own men and interfering at low levels with Sun’s
training programs. While expressing his immense disgust about the mainland
affairs, Sun also hoped Taiwan could soon have a strong civil governor over
a unified military command. He doubted that there was any serious
Communist activity in Taiwan, and claimed that the troops on the island
under him were absolutely loyal to him.26 It is clear that Sun was trying to
impress the Americans and convince them that Washington could fully rely on
him and that he was their best choice.
The peace talks between the KMT and the CCP, as had been expected,
proved to be a sham on the part of Mao Zedong, who used them only as a
chance for the PLA to rest and regroup. Mao now insisted that his earlier
eight-point proposal be adopted as a precondition to the any negotiations. As
well as punishing all “war criminals” such as Chiang Kai-shek and T. V.
Soong, Mao insisted the Communist armies be allowed to cross the Yangtze
unopposed, that the Nationalist army be folded into the PLA, that the
Communists immediately absorb the Upper Yangtze River region and
eventually all of China, and that continuance of Nationalist authority in the
KMT-sustained areas be temporary, on a “caretaker” basis, pending
convocation of a political consultative conference to form a new CCP-
dominated coalition government. These requests were favored by Li
Zongren’s peace delegation in Peking, but were totally unacceptable to the
Nationalist authorities south of the Yangtze, who deemed the acceptance of
these points as suicidal.27 On April 21, Mao ordered the PLA to resume the
offensive. Over one million Communist troops already camped on the north
bank of the Yangtze immediately sprang into action. Crossing the river, they
stormed into Nanjing on April 23, and Hangzhou, Wuhan, and Shanghai fell
consecutively within a month. A few hours before the PLA entered the
national capital, Li Zongren and his entourage fled from Nanjing city airport
to Guangzhou, the retreating Nationalists’ new headquarters.28
Just twenty-four hours before Nanjing fell to the Communists, Li Zongren
hastily flew to Hangzhou to meet with Chiang Kai-shek. Li persuaded Chiang
to restore the presidency, as the failure of the peace talks now indicated that
a continued military struggle with the CCP was the only way out. Chiang
politely turned down the request, but guaranteed that henceforth he would
“fully assist and cooperate” with Li’s administration.29 However, the two
men were unable even to agree on such an urgent issue as how to mobilize
and redeploy the now seriously demoralized Nationalist force south of the
Yangtze. Chiang ordered the withdrawal of Tang Enbo’s troops to the
southeast coastal areas through the Zhoushan offshore outpost, leading to the
abortion of Li’s original plan to transfer the force southwestward and join
Bai Chongxi’s defense along the Jiangxi-Hunan provincial border.
Impressively, Bai’s divisions, retreating from Wuhan and now being
deployed in southern Hunan province, were capable enough to check Lin
Biao’s army, thus delaying the Communist advance into South and Southwest
China for almost half a year, until October 1949.30
As the PLA marched across the Yangtze and the Nationalist capital was
moved to Guangdong, Chiang’s determination to manage his own redoubts
along China’s southeast coast increased. As of early 1949, because of the
Nationalist economic failure on the mainland, the annual rate of inflation on
the island had reached a horrendous 3,000 percent. In early March, Chiang
instructed T. V. Soong to conduct a survey tour in Taiwan about a possible
currency reform there. With the support of gold and silver reserves then
deposited in Taiwan and Amoy, Soong suggested that a new bank note,
convertible with the British pound sterling, be issued with limited circulation
in Taiwan, Fujian, and Guangdong provinces. This proposal again well
demonstrated Chiang’s ongoing strategy to build a territorial triangle in
China’s southeast.31 In May 1949, while temporarily staying in Shanghai to
supervise Tang Enbo’s arduous resistance against the PLA, Chiang again
cabled T. V. Soong, who was then in Hong Kong, to delay his trip to Europe
until Taiwan’s finances and economy were fully stabilized.32
Chiang’s effort to defend Shanghai up to the last minute, thus allowing a
successful withdrawal of Nationalist troops, was greatly praised by General
Albert Wedemeyer. In May 1949, Wedemeyer sent Chiang a personal letter,
encouraging him to build Taiwan “as a base of operation and the most
efficient government devoted to promoting the welfare of the islanders.”
More strikingly, Wedemeyer advised Chiang to replace Chen Cheng with K.
C. Wu, the reformist mayor of postwar Shanghai, who had acquired a
reputation in the United States as “La Guardia of China,” as Taiwan’s new
provincial governor.33 Greatly inspired by the American general’s message,
Chiang responded by inviting Wedemeyer to become his personal military
advisor. Curiously, however, Chiang in his reply made no mention of Wu.34
 STORMS FROM WITHIN

How Chiang Kai-shek perceived General Wedemeyer’s proposal and thought

about replacing Chen Cheng with K. C. Wu is unknown. But one thing is
clear: At this juncture, Chiang was already having other issues, besides
worrying about Taiwan. With the breakup of peace negotiations and the
resultant collapse of the Yangtze defense line, more and more Nationalist
high echelons regarded Chiang as hampering an effective anti-Communist
resistance under Li Zongren. Still more were convinced that only Chiang’s
early exit from China could strengthen Li’s leadership within the Nationalist
authorities.35 No doubt, Chiang himself sensed a waning of his influence,
especially among the Nationalist military quarters. One extraordinary
episode clearly illustrates this unpleasant situation. Before Shanghai fell,
Chiang boarded the SS Jiangjing and sailed to the Zhoushan Islands, where
he intended to spend a quiet week working on his coastal defense projects
and new military and political training programs.36 On May 12, when Chiang
was still in Zhoushan, some ten high-ranking officers from the Nationalist Air
Force unexpectedly appeared at his temporary residence, where they bluntly
urged Chiang to hand over Taiwan and to agree that the island should be
placed under the authority of the Chinese Air Force. Controlling the air
power that the PLA was still lacking, these contemptuous air force chiefs
believed they now had the strength to request, if not demand, Chiang make a
concession. One proposal was that Chiang should declare, either publicly or
privately, that General Zhou Zhirou was the supreme leader of the Nationalist
Air Force command. Startled, Chiang reprimanded these arrogant officers
right away, believing that they were abetted by the ambitious Zhou. Privately,
Chiang worried more about his rapidly declining control over the
increasingly unbridled Nationalist military establishment.37
In the meantime, as the PLA marched south, Li Zongren and the Guangxi
Clique felt an urgent need to extend their authority to Taiwan. This tendency
put Chiang’s relations with Chen Cheng to the test. In late April 1949, Li’s
close advisor Qiu Changwei told U.S. Minister-Counselor Lewis Clark that
an effective control over Taiwan’s resources was the key to the success of
the entire resistance movement. Qiu said Li was planning to approach Chen
Cheng in order to persuade Chen that it was in his best interest and that of
China that he gave full support to Li, and not Chiang Kai-shek. Only if
persuasion failed, Qiu said, did the Nationalist authorities “plan more
forceful measures [to] remove Chen.”38 A few days later, when meeting
Lewis Clark in Guilin, Li Zongren himself repeated the importance of
controlling Taiwan, and he openly sought American assistance in this regard.
Li revealed to Clark that Chiang Kai-shek had originally planned to go to
Taiwan immediately after his resignation. But when Chen Cheng passed on a
“casual remark” from the local American Consulate General in Taipei that
the legal status of the island would not be determined until a Japanese peace
treaty was signed, Chiang decided he could not retire to a place where
China’s sovereignty might be questioned. Using this inside story as a helpful
example, Li urged Washington to join him in pushing Chen Cheng to obey
instructions from him for the benefit of the whole country.39
Chen Cheng certainly felt the pressure from Li Zongren and the Nationalist
central under the Guangxi Clique. On May 16, Chiang Kai-shek sailed from
Zhoushan to the Pescadores and stayed there for a week. Chen, instead of
showing his usual loyalty by coming to greet and accompany Chiang, flew to
Guangzhou to meet with Li, a move Chiang had tried in vain to prevent. The
acting president allegedly warned the Taiwan provincial governor that he
either hand over the gold reserves and silver ingots on the island or wait to
be dismissed. Under severe pressure from the Guangxi Clique and,
presumably, from the United States as well, Chen told Lewis Clark
confidentially that all the resources would be placed at Li’s disposal so long
as Li showed determination to continue the anti-Communist resistance.40
While at the Pescadores, Chiang, on hearing Chen’s words, became
extremely anxious about Chen’s attitude and shaky position. He hastily sent
word to Chen to the effect that he personally would not oppose transferring
the reserves out of Taiwan if Li Zongren agreed to use them to fight the
Communists. Chiang made a further concession by claiming that Li as the
head of the state surely had the right to locate the reserves anywhere safer
than Taiwan.41
In hindsight, Chen Cheng’s ostensible defiance of Chiang Kai-shek’s wish
and his going to meet Li Zongren in Guangzhou in May 1949 turned out to be
a crucial turning point in Taiwan’s fate. A rapidly worsening situation on the
mainland forced Chen Cheng to have second thoughts about Chiang’s
strategic territorial triangle. The loss of Shanghai as Taiwan’s crucial
import-export market and entrepôt meant that a diversion of Taiwan’s trade
market to Fujian, Guangdong, or even abroad to Manila and Hong Kong was
now a necessity.42 In the meantime, Chen grew stronger in his determination
to sever Taiwan’s currency tie with the mainland, as he saw this as a last
resort to assure the island’s monetary stability. He even radically proposed
that Chinese customs commissioners stationed in Kaohsiung and Keelung,
legally under the supervision of the foreign-controlled Inspectorate General,
be removed and replaced by heads of the conservancy bureaus of the two
cities. Inspector-general Lester K. Little deemed such action a “death-blow”
to the century-long maritime customs services system in China, and
threatened to resign if Chen insisted on it.43
4.1Chen Cheng (middle at the front row), Chiang Ching-kuo (first from right at the front row), and core
members of the KMT Central Reform Committee in the early 1950s. In mid-1949, Chen helped stabilize
Taiwan by defying the Generalissimo. (Courtesy KMT Party History Institute)

To stabilize Taiwan’s finances and economy, Cheng Chen insisted that

some drastic measures be undertaken. To achieve this end, Chen needed to
secure endorsement from the Nationalist center, despite its weakening
legitimacy. Chen’s strategy proved to be a successful one. Having returned to
Taipei after back-room negotiations with Li Zongren and other Nationalist
high officials, on May 27, Chen announced four new measures to be
introduced to regulate the island’s finances and economy. First of all, with
Guangzhou’s consent, Taiwan’s foreign exchange would henceforth be under
the direct control of the Bank of Taiwan. Second, Guangzhou agreed to allow
the Taiwan provincial government more maneuverability to use the island’s
foreign exchange. Third, Guangzhou agreed to allow the provincial
government to use gold and silver reserves, foreign exchange, tax revenues,
and locally stored state-owned materiel to pay for the central government
agencies and personnel on the island. Finally, Guangzhou agreed to authorize
the Bank of Taiwan to collect local taxes, thus allowing the provincial
authorities to manage disbursement issues on behalf of the central
government.44 With these new measures, Taiwan’s financial and foreign-
trade autonomy was increased, the island’s budget deficit was expected to be
reduced, and inflation could be prevented. Meanwhile, the provincial
authorities were now having a greater say in the use of local tax revenues,
and, more significantly, they were now given the right to handle all state-own
materiel on the island, thus greatly enhancing Taiwan’s economic autonomy.
On June 5, the Taiwan Production Board was duly inaugurated to regulate
the island’s foreign exchange and formulate its financial and trade (and, later
on, industrial and economic) policies. The functioning of this new institution
also marked the beginning of Taiwan’s gradual departure from its previous
position as a part of the mainland Chinese economy.45 Ten days later, on June
15, a new monetary scheme was further brought up in Taipei. With the
backing of 800,000 taels of gold reserves stored in the island, the Bank of
Taiwan issued the “New Taiwan Dollar” to replace the old bank notes. A
ceiling of 200 million New Taiwan Dollars was placed on issuance with
sufficient reserves from the Bank of Taiwan to ensure a one hundred percent
gold, silver, and commodity cover. In addition, the new notes would be
pegged to U.S. dollars, rather than to the pound sterling, and a gold savings
deposit program was created allowing individuals to deposit new notes in
accounts that would return gold at maturity. Having cut its monetary ties with
the increasingly chaotic Chinese mainland currency, Taiwan’s financial
condition was gradually stabilized.46
Undoubtedly, Chen Cheng was wise enough to factor the situation on the
mainland into his policies in Taiwan, even if this implied defying Chiang
Kai-shek, his mentor.47 On April 23, Chen issued an order urging his
subordinates throughout the island to oversee the reduction of rent prices
from over 50 percent to a maximum of 37.5 percent of the annual yield of the
main crops, a new land reform program that had officially been put forward
in February 1949. The provincial government was determined to redistribute
public lands to the island’s poor farmers and tenants at the expense of the
landlords, with whom Chen Cheng had no connection.48 More crucially, it
was a survivalist attempt to stabilize the situation and reassure the public,
particularly tenant farmers who made up the bulk of Taiwan’s population, at
a critical moment: Nanjing had just fallen to the Chinese Communists. To
ensure an efficient policy implementation, Chen emphasized “severe
punishments” would be carried out if landlords refused to cooperate.49
On May 1, when Hangzhou also fell to the Communists, Chen Cheng
ordered the launch of perhaps the most comprehensive island-wide
household investigation since the colonial period. As Chen claimed publicly,
the purpose of the investigation was to “ferret out the hidden spies and
strengthen public security.”50 This move was followed by Chen’s declaration
of martial law on Taiwan on May 20, when the fall of Shanghai was
imminent and therefore something urgent had to be done to stop the flood of
mainlanders into Taiwan. Except Keelung, Kaohsiung, and Magong on the
Pescadores, where the Taiwan Garrison Command now took control, the
remaining port cities throughout the island were closed for security
reasons.51 It was not until 1987 that the May 20 Martial Law on Taiwan was
finally lifted.
 THE GENERALISSIMO’S GLOOMY MOMENT

It is conceivable that what Chen Cheng had undertaken in mid-1949,

including his stay in Guangzhou with Li Zongren, was primarily for the good
of Taiwan. At the last minute Chen did not compromise himself with the
Guangxi Clique over the reserve issue, but his personal relations with Chiang
did not improve either. Uncertain whether Chen’s loyalty to him was still
unchanged, and whether Chen would genuinely welcome his arrival in
Taiwan, a confounded and worried Chiang waited on the bleak and barren
Pescadores. Then, on May 21, Chen, unanticipated, flew to meet Chiang from
Guangzhou, a pleasant surprise that had “eliminated the anxiety I have
suffered in the past week,” Chiang confided in his diary that day.52 Yet the
reality was that Chen’s genuine political intention remained ambiguous, and
his attitude toward Chiang was remarkably cold. Chiang bitterly complained
in his personal journal that many of his erstwhile military subordinates,
particularly Chen, were now treating him with growing disrespect,
arrogance, and impatience.53 On May 25, 1949, before departing the
Pescadores for Taiwan, Chiang decided to go to Kaohsiung, not Taipei, as
his next stopover. Whether at this juncture Chiang was apprehensive about
his handpicked provincial governor is an interesting question; upon his
arrival at Kaohsiung, Chiang’s first words to the waiting Sun Liren were,
allegedly, “Am I safe here?”54
Chiang was probably physically safe in Taiwan, but in the following
weeks, his relationship with the supposedly faithful Nationalist military
leaders went from bad to worse. To safeguard the putative territorial
strategic triangle in Southeast China, Chiang deemed it extremely imperative
to create a new command structure encompassing Taiwan, the Pescadores,
and other Nationalist-held offshore islands along the coasts of Zhejiang,
Fujian, and Guangdong. For Taiwan to be an effective base of operations in
such a strategic triangle, it was vital that the new command structure should
operate independently from the Communist-beleaguered mainland. So Chiang
was frustrated to discover that most of his former military subordinates were
now uncooperative and unmoved about such a supposedly life-and-death
military arrangement. General Zhou Zhirou argued that Chiang’s direct
involvement in military affairs had ruptured the unity of the air force and
demoralized the Nationalist forces. Zhou cast doubt on Chiang’s authority to
command the forces, a question that an extremely embarrassed Chiang found
it hard to answer. In the end, irked and humiliated, Chiang replied rather
unconvincingly that, as a “revolutionary leader,” if not as a head of state, he
still possessed supreme power over the Chinese Nationalist military.55 To
many Nationalist military leaders, this was nothing but a chicanery.
Zhou Zhirou’s case was by no means the first and last. Sun Liren also
defied Chiang by refusing to accommodate in his Fengshan headquarters Tang
Enbo’s defeated forces recently retreating from Shanghai via the Zhoushan
isles.56 Worse still, around late May and early June 1949, rumors began to
circulate that the deputy commander of Taiwan’s provincial garrison forces,
Peng Mengqi, having long been regarded as a staunch follower of Chiang
father and son, had secretly flown to Hong Kong, where he was allegedly
making secret overtures with local Chinese Communist representatives.
Given Peng’s powerful command over 80,000 troops in Taiwan at that time,
the American intelligence establishment, which also found this rumor nerve-
racking, tried to verify Peng’s future political inclination, which was seen by
the State Department as crucial to the fate of the island. At one point, agitated
Washington officials were busy drafting secret plans to render support to Sun
Liren so as to safeguard his powerbase in southern Taiwan in the event that
Peng proved to be a turncoat.57
More ominous from Chiang’s standpoint was Chen Cheng’s refusal to lead
the newly created command structure, called the Southeast Military and
Political Administration, an organization responsible for coordinating the
rapidly diminishing Nationalist military resources in Southeast China. Chen
thought that he could never enjoy full authority as long as Chiang was behind
the scene.58 Very likely, Chen was also wary of a negative response, not only
from Li Zongren, but also from Washington, where some at this stage seemed
not entirely discarded supporting Chen’s provincial administration but only if
he chose to distance himself further from Chiang.59 It was not until two
months later, in mid-August, that Chen finally agreed, albeit extremely
reluctantly, to accept the post. Chen’s acceptance came only after a
humiliated and infuriated Chiang thundered at him in a showdown.60
Adding to Chiang’s frustration about his relations with the unruly
Nationalist military chiefs was the arrival of a bleak message, which
confirmed that the United States had political designs on the island. On June
15, 1949, Chiang received two urgent letters from his wife that Washington
was formulating feasible plans to place Taiwan under the trusteeships of
either the United Nations or the SCAP headquarters in Tokyo.61 Madame
Chiang was by no means just scaring her husband. In early June, MacArthur
wrote to George Kennan, then director of policy planning in the State
Department, expressing his concern that Dean Acheson was paying so much
attention to Europe that “the oriental masses” might gather the impression that
Washington was relaxing its commitment “to hold our Far Eastern position.”
Shortly afterward, the general received a letter back from Kennan related to
“a project of the greatest delicacy concerning which some of my associates
and I have great interest.”62 Not entirely coincidental, around this time some
within the CIA were talking about “the assassination of an [unnamed] Asian
leader,” causing much disturbance in Washington’s highest intelligence
circles. The issue later went up the chain of command at the agency, where
the assistant to the director of special operations openly denied having such a
plot.63
Whether or not there was a genuine plot to assassinate Chiang, an
undeniable fact was that, from mid-1949 on, SCAP’s criticism of Chiang
escalated. In September, for example, MacArthur told a congressional
delegation visiting Tokyo that Chiang was surrounded by corrupt officials
including corrupt generals, adding that Chiang was “a highly intelligent
individual but knows nothing of the art of war.”64 Later on, when MacArthur
responded to a request for guidance from the publisher of the New York
Times, whose editorials were favorable to Chiang, he commented by saying
that Taiwan’s defenders could not be counted on long to resist a determined
enemy’s amphibious assault. In the meantime, sources began reporting that
MacArthur was contemplating the government “he is to establish on Taiwan”
after Nationalist underlings urged Chiang Kai-shek to “take a trip abroad,”
causing political rumors to spread quickly in Taiwan that the SCAP takeover
of the island was imminent.65
Back in Taipei, although not totally surprised by the American intention to
exploit Taiwan’s undefined legal and sovereign status to protect its interests,
Chiang nevertheless felt deeply hurt and betrayed, and in the days that
followed he was unable to come up with a clear response to this stunning
message.66 Five days after receiving Madame Chiang’s secret messages,
Chiang wrote to MacArthur and expressed his resolution to make “a last-
ditch defense” of the island. Chiang invited the American general to conduct
a joint defense operation in this endeavor, but nevertheless reiterated that the
island should never be handed over to the United Nations.67 Strikingly,
although outwardly standing firm on his position on Taiwan, Chiang had
already begun to have second thoughts about his overall anti-Communist
endeavors both on the Chinese mainland and on Taiwan.
Indeed, by the middle of 1949, the military situation of Taiwan looked
extremely somber. A confidential dispatch by the British consular post in
Tamsui reported in May 1949 that certain Nationalist leaders were so
skeptical about their ability to hold the island against the Communists for any
length of time that they were unwilling to take positions that would impair
their relations with a future Communist regime.68 Shortly after the fall of
Fuzhou, Sun Liren did not hesitate to remind Chiang that the PLA could land
200,000 soldiers on Taiwan from an armada of 1,000 junks within twenty-
four hours, and the island’s fate would be doomed if no further foreign
materiel was forthcoming.69 As the situation on the mainland continued to
decline, the Americans were speeding up their maneuvering over the island.
In May 1949, as the British observed, a newly installed large wireless
station within the U.S. Consulate General in Taipei began direct
communications with Washington.70 Many U.S. military personnel, including
air, naval, and military attachés, consecutively arrived in southern Taiwan to
get in close contact with Sun Liren and his headquarters, and, as the British
put it candidly, their arrival definitely bore sensitive political implications.71
It was a defining moment for Chiang Kai-shek. Within the Nationalist
hierarchy, he now seemed to have very few civil or military subordinates to
count on. Outwardly, the United States was exploring possible ways, notably
Taiwan’s unsettled legal status, to prevent the island from falling to the
Communists. The situation ahead was fluid and uncertain, putting Chiang
again at a critical point. As Taiwan was by no means completely safe,
searching for other possible power bases on the mainland had become a
difficult yet inescapable choice for him.
 5
Last Gasp on the Mainland

BY MID-JULY 1949, Chiang Kai-shek was already in Guangzhou with Li

Zongren and other Nationalist regional and factional leaders, whom he had
earlier despised and long resented. One purpose of this gathering was to
create a new KMT Extraordinary Committee to cope with the Nationalist
resistance against the Chinese Communists, and to demarcate new war zones
and responsibilities within their shrinking territories south of the Yangtze.
This was a goal which the Americans expected to be “almost futile.”1 Chiang
was elected chairman of this committee, giving him a new sort of political
legitimacy useful to his subsequent activities both on the mainland and
Taiwan. To rescue a demoralized Nationalist regime, Chiang openly
declared his desire to safeguard Guangzhou and consolidate South China as
the last anti-Communist base. But his fellow Nationalists did not share such a
resolve. General Yu Hanmou, for example, Chiang’s handpicked garrison
commander of the Guangzhou metropolis, did not hesitate to show his
pessimism about an effective defense of Guangzhou. Yu therefore asked
Chiang to consider replacing him with someone more capable of doing the
job. Chiang, furious, reprimanded Yu by threatening that he would personally
go to the forefront to lead the command if the latter did not feel responsible
enough to fulfill his duty.2
Without a doubt, Chiang Kai-shek’s presence in Guangzhou in the summer
of 1949 had major political implications. An ostensible reunion of Chiang
and Li Zongren was made possible, at a time when the Nationalist forces
under Bai Chongxi were able to hold their “Maginot Line,” running from
Changsha in Hunan down to Amoy in Fujian and Swatow at the eastern tip of
Guangdong. Upper Nationalist echelons, including both Chiang and Li, were
cautiously optimistic that, so long as Hunan province could be held as a
shield against further Communist advance, a Guangzhou-based Nationalist
regime might secure Guangdong, Guangxi, Hainan Island, and the rest of
Southwest China.3 Indeed, the Nationalist war cause momentarily showed
signs of improvement in the early summer of 1949. In Central China, Bai
Chongxi’s divisions on the Hunan-Jiangxi border miraculously fended off the
PLA for more than eight weeks. In the far northwest, the Ma Muslims and Hu
Zongnan’s divisions triumphantly regained a dozen counties and cities in
Shaanxi Province, at one point forcing PLA Marshal Peng Dehuai to
withdraw eastward. These successes allowed Chiang to express excitement
about KMT’s “revival of will to resist” to Lewis Clark, the American
minister-counselor in Guangzhou.4 Equally elated by the Nationalists’
momentary military achievements, Roger Lapham, chief of the Economic
Cooperation Administration’s (ECA) mission to China, passed on his verbal
message to Li Zongren to the effect that Washington would still be willing to
save his regime. If the Nationalists continued to hold the current defense line,
Lapham promised, renewed U.S. aid might soon be forthcoming.5
Chiang Kai-shek wanted to remain viable as a likely recipient of any
renewed U.S. aid, and began a whirlwind of domestic and international
political activity to improve his visibility. On July 10, 1949, at the invitation
of Philippine President Elpidio Quirino, Chiang flew to Baguio for a brief
but high-profile visit. In Baguio, Chiang and Quirino discussed a Pacific
Union along the line of the newly created NATO, including Nationalist
China, the Philippines, South Korea and virtually every Far Eastern nation
willing to embrace an anti-communism stance.6 Lewis Clark wryly
commented on Chiang’s diplomatic drama as nothing more than marking “a
definite change from [his] retirement.”7 Bureaucrats at Foggy Bottom, on the
other hand, posited that Chiang believed the Philippines and other states in
the proposed Pacific Union might be utilized as instruments to bring further
pressure on Washington for aid to his anti-Communist cause in China. They
therefore advocated that efforts should be made to wean Quirino from
Chiang, and to influence the former to adopt an alternative plan that excluded
Nationalist China. It was also proposed that Washington should make it clear
to Quirino and Chiang that the proposed anti-communist movement and any
structure that might be evolve from it must not appear to be “an instrument
designed primarily to extract and channel U.S. or other western aid.”8 CIA
officials, while concurring with the State Department, warily remarked that
one crucial purpose of this Chiang-Quirino show might be to “legalize” the
undefined position of Taiwan, probably through a joint declaration by the
Pacific powers that the island was not a part of Communist China.9
K. C. Wu, now a key member in the newly established KMT Director-
General’s Office, who accompanied Chiang to Baguio, revealed to his
contacts in the U.S. Consulate General in Taipei that the trip was actually
part of an overall effort to prepare “for further disasters on the mainland,”
hinting that Chiang might be seeking a refuge in exile.10 Wu’s disclosure thus
further convinced the consular staff’s earlier surmise that Chiang, preparing
for the worst, might attempt to transfer a portion of the government’s gold
reserve from Taiwan to the Philippines.11 In his personal diary, though,
Chiang only mentioned that one important achievement resulting from his
visit to Baguio was to secure President Quirino’s permission to sell surplus
war materials left by the United States to him so as to continue Nationalist
resistance against the Communists.12
Four weeks later, on August 6, Chiang conducted another significant,
although comparatively low-keyed visit to Jinhae on the southern tip of the
Korean peninsular, where he was warmly greeted by South Korean president
Syngman Rhee. The formation of an anti-communist bloc in East Asia and an
attempt on Chiang’s part to elevate his prestige, as the foreign diplomatic
corps in China observed, were ostensible reasons for this visit.13 More
critically, however, was Chiang’s endeavor to seek Rhee’s support in
creating several covert offshore outposts at Chiang’s disposal along South
Korea’s western coast. As Chiang’s secret files now reveal, Chiang planned
to use these Korean offshore isles as staging posts to infiltrate Communist-
controlled North China, to block potential Communist naval activities, to
offer his intelligence personnel out of Qingdao a safe haven, and, in time, to
launch a military counterattack in North and Northeast China.14 A politically
sophisticated Rhee did not make any commitment, but instead asked Chiang
for more military assistance, such as the training of Korean air and naval
operations, and an incredible list of arms for sale or as gifts, from the
Nationalists, including thirty F-51 fighter planes, five C-47 transport
aircrafts, thirty AT-6 trainers, 50,000 USM/30 rifles, and seven warships of
various types.15 The requests were hard to entertain, and Chiang was
noncommittal. The meeting thus produced little more than hollow statements
and a moderate increase in Chiang’s personal prestige among the ailing
Nationalist hierarchy.
5.1Chiang Kai-shek (middle) meets with Philippine president Elpidio Quirino (right) at Baguio in July
1949 in an effort to establish an anticommunist alliance in Asia. (Courtesy KMT Party History Institute)
5.2Chiang Kai-shek (second from left) with the first couple of South Korea in Jinhae in August 1949.
(Courtesy of the KMT Party History Institute)

Back in Taiwan, Chen Cheng continued to act in accordance with his own
plan, thereby his relationship with Chiang did not improve. In mid-July 1949,
Chen openly rejected Chiang’s order to set aside part of the island’s military
provisions for Tang Enbo’s troops entrapped in Fujian. Chen’s disobedience
led a maddened Chiang to upbraid Chen as “feudal” and “wanton.”16 When
the fall of Fuzhou was imminent in the last week of August 1949, Chiang
pressed Chen to dispatch naval and air forces from Taiwan to relieve the
besieged Nationalist forces. Using the excuse of bad weather, Chen defied
Chiang’s order once again.17
At one point in 1949, Chen seemed closer in his relationships with the
elements from other KMT cliques and factions than with Chiang. According
to a secret report from the CCP underground units in South China, around
early summer 1949, when there was much discussion about consolidating
Guangzhou under Li Zongren’s leadership, Chen Cheng was having very
intimate contact with such anti-Chiang Cantonese militarists as Chen Jitang,
the governor of Hainan Island appointed by the Guangxi Clique. Exchanges
of military representatives between Taipei and Hainan were underway, and
both men seemed to agree on launching joint military training programs for
anti-Communist campaigns.18 One likely reward for Chen’s closeness to Li,
according to one British consular report from Taiwan, would be a division of
the Nationalist defense establishment into two sections, with one established
in Chongqing in Southwest China and the other in Taipei under Chen’s
command.19
Chen Cheng had reasons to be tough with Chiang. For a moment in the
middle of 1949, the United States seemed still to place its hope on Chen,
rather than any other military leaders on the island. With a series of positive
reforms now being launched for the good of Taiwan, Chen was more
instrumental, in the eyes of some officials in Washington, than Sun Liren, who
was more cooperative with Chiang, at least outwardly. While Chen rejected
Chiang’s instructions, Sun, albeit reluctantly, was willing to dispatch one of
his best student regiments from Fengshan to Amoy to rescue Tang Enbo’s
crumbling forces. Moreover, Sun complied with Chiang by sending another
artillery battalion of his own to Zhoushan to fight an equally perilous battle
there. After learning of the sacrifice of his men in Fujian, Sun expressed his
regrets to the U.S. consular staff in Taipei at such “piecemeal commitment of
these half-trained troops,” as well bitter complaints about Chiang Kai-shek
and the “abhorrent KMT regime.”20
With these new developments along China’s southeast coast, American
diplomats in Taiwan observed with sobriety that Sun Liren’s authority would
be considerably curtailed by Chen Cheng. When the command structure of
Southeast China was reorganized in mid-August 1949, Sun was made head of
the Taiwan Defense Command, while Peng Mengqi was slated to lead the
Taiwan Peace Preservation Command. Although the two positions were
equally ranked under Chen Cheng’s command, it soon turned out that Peng’s
command would include all garrison forces and the police in Taiwan,
leaving Sun with only an empty title. Peng, known as Chen Cheng’s cohort,
now virtually became the second boss on the island.21 The Americans on the
island also noticed that, while other Nationalist forces in Taiwan were
salaried with silver dollars, only Sun’s men were paid in the increasingly
devalued bank notes. A highly dubious proposition from the U.S. consular
staff in Taipei was that the continued influx into Taiwan of Nationalist troops
from the mainland under Chen and Peng’s command did nothing to enhance
Taiwan’s defense capability, but instead only diluted Sun’s military influence
on the island.22
These observations led U.S. officials both in Taipei and in Washington to
temporarily believe that Chen Cheng’s presence in Taiwan “creates fewer
problems” than Chiang Kai-shek’s, and thus Washington should convey its
views to Chen instead of Chiang.23 It was therefore not surprising that,
around mid-September 1949, when rumor was prevailing that a Formosan
autonomous government would soon be established after Guangzhou fell to
the Communists, the United States predicted Chen Cheng, the so-called
Minister of War of this new regional political mechanism, would be the real
person to reign behind the scenes.24
In early August 1949, the situation on the mainland suddenly became
critical when the governor of Hunan, Cheng Qian, and the 80,000-odd
Nationalist forces under him, defected to the Chinese Communists. This was
a decisive blow to Li Zongren and Bai Chongxi, who had so far admirably
established an effective resistance movement in South China.25 The result of
this “transfer of political loyalty,” to cite Cheng Qian’s words, threatened to
collapse Guangzhou’s defense line on the eastern front. As the Nationalist
“Maginot Line” was now exposed to the turncoats in Hunan Province, the
Nationalist bases in Guangdong and Guangxi had become extremely
vulnerable.26 Shortly thereafter Bai arduously but quite successfully
prevented a possible domino effect within the remaining Nationalist forces
under his command. Nevertheless, a sudden shift of the political landscape in
Central China would very likely dim the last hope of American support for Li
Zongren. On August 6, Li candidly inquired of Lewis Clark whether
Washington would still consider supporting certain “autonomous areas
continuing to resist communism,” such as the Ma Muslims in the northwest
and, notably, Guangxi province and the Guangxi army under Bai. Li now
intended to return to his home province as leader of the local resistance
forces.27
Before obtaining a clear response from Lewis Clark, an anxious and
impatient Li had already instructed V. K. Wellington Koo, Nationalist
Chinese ambassador in Washington, to propose to the State Department a
draft military aid program for China. In this draft proposal, Koo pointed out
that the Nationalists still controlled a vast integral territory extending from
Inner Mongolia and the Northwest to most of the provinces south of the
Yangtze. These territories constituted a large base of operations against the
Communists, and it was in this chain of mountains that the Japanese had been
successfully stopped at the peak of World War II. Koo accordingly urged
Washington to render a total of $287 million in military aid to Li’s
Nationalist government.28
Upon receiving Koo’s proposal, Dean Acheson and Defense Secretary
Louis Johnson carefully evaluated its feasibility. Most State Department staff
took a rather unfavorable stance toward Koo’s request. Wesley J. Jones,
counselor for the American embassy in China, stated that Li and Bai were
going to withdraw to a province “already infested with Communist bandit
groups” operating on the Yunnan-Guangxi and Guangdong-Guangxi borders.29
Robert Strong, U.S. chargé d’affaires in China, also deemed Li’s appeal
inappropriate, as it lacked “realistic plans of [a] long-range nature” on the
basis of which the United States could consider the question of aid.30
On September 16, 1949, when the greater Guangzhou metropolis was
apparently in danger, Li Zongren conveyed an urgent message, via Robert
Strong, to Vice Admiral Oscar C. Badger, commander of the U.S. naval
forces in the Far East. Li stated that his government was in an extremely
difficult situation, and within a few days its fate would be decided in the
battle in Hunan. Li argued that if the United States intended any military,
financial, or even moral backing, regardless of the amount, “the time is now.”
“Our position is critical,” Li exclaimed.31 As it would turn out later, Badger
did stretch out a helping hand to the moribund Nationalists. However,
Badger’s help went not to Li, but, surprisingly, to an ostensibly deserted
Chiang Kai-shek.
The collapse of Hu Zongnan and the Ma Muslims’ defense in Shaanxi,
Gansu, Ningxia, and Qinghai in late August and early September, along with
the open secret that a peaceful “transfer of power” within the Xinjiang
provincial authorities was underway, had indicated that Southwest China
was now the Nationalists’ final hope on the mainland. In mid-September
1949, Capitol Hill approved a new budget of $75 million in the Military
Assistance Program (MAP), under the auspices of the Foreign Assistance
Act of 1948, to assist the “general area” of China. One month later, on
October 14, Louis Johnson sent a memorandum to Acheson in which the
much worried defense secretary specified straightforwardly that as long as
the Nationalist forces were able to hold the defensive line in China’s
southwest and established bases of training and operations for a
counterattack, he was ready to offer China’s regional leaders military aid
from the new MAP program.32
A response memorandum was prepared a week later by the planning-level
staff in the State Department, agreeing that, despite the bleak situation of the
Chinese Nationalists, there was still a non-Communist area in South China
some 500 miles wide and a potential anti-Communist belt in Southwest
China of even greater depth. These areas, as the State Department
bureaucrats saw it, separated Southeast Asia from Communist-controlled
China, and once China fell, all of Asia would, in all probability, eventually
succumb to communism. Bringing Chiang Kai-shek and Li Zongren together
and reunifying the KMT now seemed impractical, and as a result, the
situation was ripe for the rise of local warlords in the non-Communist areas,
as these portions of China were no longer controlled by one man or a group
or by a central government. The memorandum concluded that a “modest,
well-directed” program of aid to China would now be in the security interest
of the United States, and that the program for aid to China should include
“aid directly to non-Communist forces” as long as this was practicable.33
Not everyone in Washington was happy with such a conclusion. The CIA,
for example, in its estimate issued on October 19, 1949, insisted that, even
with extensive U.S. support short of major armed intervention involving the
use of combat forces, none of the non-Communist regimes in China could
survive beyond 1950 except on Communist sufferance. To sum up, as the CIA
perceived, there was no survival potential for non-Communist regional
regimes in China.34 Nonetheless, with a strong possibility that U.S. aid
would be forthcoming to secure Southwest China, a fierce power struggle
over that region soon erupted between Chiang and Li, leading to a revelation
of a hitherto untold story of an aborted Yunnan independent movement during
the last months of 1949.
 A VEILED STRUGGLE IN SOUTHWEST CHINA

Around mid-August 1949, when Chiang Kai-shek was in deep trouble with
the Nationalist high military officials over the defense in the southeast, and
when the fall of Fuzhou at the other end of the Taiwan Strait was imminent,
he became extremely worried about Taiwan’s defense. The island’s
unresolved legal status, coupled with Washington’s ambiguous attitude
toward the issue, further deepened this. These considerations prompted
Chiang to search for an alternative power bastion on the mainland. In late
August, a secret proposal was brought to Chiang’s attention. Li Zonghuang,
one of the very few Yunnanese politicians who had Chiang’s trust, suggested
to Chiang that he use Yunnan as his final territorial base against the
Communists, as the security of both Taiwan and Guangdong was in doubt.
Li’s rationale was logical: Yunnan, a high, mountainous plateau with an area
estimated at more than 150,000 square miles and a population of about 12
million, remained free from an immediate PLA threat. In addition, the
province’s geographical proximity to Burma and Indochina was ideal for
communicating with the outside world. But to consolidate Yunnan as
Chiang’s final redoubt, it was imperative to settle with a politically wayward
governor Lu Han and other proactive leftist elements in the province.35
A political irony was that Lu Han’s governorship was endorsed by no one
but Chiang. In the summer of 1945, Chiang initiated a coup in Yunnan to
remove Long Yun, the powerful Sinicized ethnic Yi who had ruled the
province for nearly two decades. When Japan surrendered, Chiang ordered
Long’s Yunnanese troops to occupy Indochina on behalf of the Nationalist
government. The unsuspicious Long Yun followed suit, leaving Kunming, the
provincial capital, vulnerable. In a quick coup, the remaining local troops
loyal to Chiang surrounded and disarmed Long’s retainers, and the helpless
Long was packed off to Chongqing, and then Nanjing, where he was kept
under Chiang’s surveillance. Chiang later appointed Lu Han, Long’s distant
relative, principal protégé, and chief military subordinate, as the new
governor.36 Hence, Lu played well with the Nationalist central authorities
who had put him in power. Anti-KMT and leftist movements that were
rampant during Long Yun’s reign were largely checked, and Nationalist
influence in the province quickly grew. It was not until early 1949 that a
worsening military and political situation in China shook Lu’s pro-KMT
stance.37
Li Zonghuang provided two possible courses of action for Chiang to
contemplate: the Generalissimo might take the opportunity offered by a
scheduled meeting of Southwestern governors to remove Lu and appoint
someone else, or Chiang might use the two central government armies then
stationed in Yunnan under the commands of Generals Yu Chengwan and Li
Mi to subdue Lu and reorganize the provincial government.38 Chiang
obviously gave Li Zonghuang’s proposals very careful thought. He agreed
that Lu Han’s attitude was the most critical factor in determining the success
of the whole resistance movement in Southwest China, and he was ready to
work out a thorough plan to achieve this end.39
Where did Chiang Kai-shek’s momentary confidence in this last mainland
endeavor come from? The speculation about probable U.S. aid to China’s
regional authorities in the southwest was surely one important factor.
Moreover, the PLA’s smooth advance into Northwest China since late August
1949 also led Chiang to predict, inaccurately as it turned out, that Mao
Zedong might prefer a military occupation of the entire northwest, thus
connecting Communist-controlled China with his Soviet patrons. The
corollary was that the Communists would delay their operations south of the
Yangtze so as not to divert focus from their ongoing campaigns in the far
northwest.40 In line with this wishful thinking, Chiang’s aides initiated a new
military scheme, aiming at mustering at least three additional army divisions
in Southwest China and enlisting Khampa Tibetans into the new combat
force. Chiang obviously intended to use these ethnic divisions, backed up by
Hu Zongnan’s forces then retreating from Shaanxi into Sichuan, to march
westward into the Xikang-Tibet borderland, where Chiang’s over-optimistic
stalwarts sought to create Nationalist China’s “last anti-Communist base in
the high plateau” and to extend Yunnan’s rear bases in the event of a retreat.41
To play out this last gambit, in the last week of August 1949, Chiang went
to Chongqing. He summoned provincial governors and division commanders
for meetings, laying out strategy and voicing his determination to keep the
PLA out of Sichuan and the territories beyond.42 Whereas most of the
regional military leaders were present at the meetings, Lu Han had declined
to join, which intensified Chiang’s worry and suspicion. A military coup to
remove Lu, proposed by Li Zonghuang, was underway. Meanwhile, in early
September, Chiang secretly instructed General Yu Chengwan to maneuver the
26th Army, now garrisoned on the outskirts of Kunming, for a surprise attack
on Lu’s residence and then to occupy key provincial buildings.43 Chiang was
so eager to control Yunnan that his secret service agents were meanwhile
plotting to assassinate several key politicians in the province who were
bitterly opposed to Chiang and were making secret deals with the local
Communists.44
Fully aware of the geostrategic significance of Yunnan in the event of the
fall of South China, Li Zongren and the Guangxi Clique were anxious to
stretch their influence into the province using a different, but equally drastic
approach. Exploiting his capacity as an acting president, Li decided to
appoint General Lu Daoyuan, a veteran Yunnanese militarist then serving
under Bai Chongxi, as Yunnan’s new provincial governor. Anticipating that
this appointment would stir up political turmoil in Kunming, Li planned to
airdrop General Lu Daoyuan’s divisions into Yunnan to control the situation.
If Lu Han refused to comply and intended to resist, Li would pour more of
Bai’s divisions into the province from adjacent Guangxi and Guizhou.45
The heated power struggle between Chiang and Li over Yunnan forced the
uneasy and mentally vacillating Lu Han to take self-protective actions. To
survive politically, Lu decided to throw in his lot with Chiang. On September
6, without warning, Lu flew to Chongqing to meet a surprised Chiang. With
tears running down his face, Lu Han explained his difficult situation in
Yunnan, begging Chiang’s understanding and support. Lu promised to side
with Chiang as long as financial aid was provided and more garrison forces
were sent in to assist local “bandit suppression” and expel the Communists.
Deeming Lu’s risky idea worth giving a try, Chiang appropriated one million
silver dollars out of the reserve in Taiwan to facilitate Lu’s anti-Communist
cause.46
Satisfied, Lu Han flew back to Kunming and launched “operation
cleanup” according to Chiang’s wishes. All publications, except two pro-
KMT papers, were closed, and all public meetings without official approval
were forbidden. The noisy provincial council was dissolved, and the KMT
secret service began widespread arrests of pro-CCP or leftist students and
politicians within the province. Most important of all, Nationalist
reinforcements, salaried by Chiang’s gold and silver reserves, began moving
into the province from the adjacent Sichuan and Guizhou provinces.47 This
episode, widely viewed as a coup of another kind, gave Chiang and his
faithful followers hope. Writing in his diary, Chiang devotedly thanked his
“Heavenly Father” for bringing about such a victory, which he described as a
crucial turning point for the whole Chinese nation. Overly optimistic that a
power base was now consolidated in Southwest China, Chiang began
seriously considering kicking Li Zongren out and returning to the
presidency.48
Back in Taiwan, Lu Han’s vacillating attitude and the “political cleanup”
in Yunnan triggered new rumors about the future of the island. The American
consul general in Taipei, John MacDonald, reported a rumor that the SCAP
in Tokyo would bring Allied forces to Taiwan by mid-October to thwart a
Communist takeover. Although Chen Cheng made several public statements
on the stability and oneness of Taiwan with China, local uneasiness
continued to mount. MacDonald observed that, because many islanders
believed trouble was imminent and inevitable, their anti-Chinese feeling was
much greater than in the aftermath of the February 28 incident of 1947.49
When informed that SCAP was not coming to Taiwan, Taiwanese elites were
so disappointed that they urged the United States to either step in and keep
the Communist invasion out or sponsor them to present a petition regarding
Taiwan’s future to the United Nations.50
In the eyes of Chiang Kai-shek, the security of Taiwan remained in serious
doubt. On October 5, 1949, shortly after returning from the mainland, he
received another secret report from Madame Chiang to the effect that Sun
Liren was having unusual relations with “certain foreign and Communist
underground elements [in the State Department],” who were attempting to
alienate Sun further from Chiang.51 Perhaps around this time Chiang realized
that Washington would eventually pick Sun Liren, along with K. C. Wu, to
take over the island’s military and political affairs under the aegis of the
MAP aid program recently approved by Congress. Chiang’s apprehension
redoubled when he learned from General Claire Chennault that Washington
would allocate part of the new fund to support Bai Chongxi in sustaining the
Guangxi Clique’s anti-Communist efforts in Southwest China.52 The U.S. aid
to China, if it materialized, then was likely to become regionalized; Chiang
thus deemed it almost impossible that any substantial amount of MAP aid
would come to him.
The Generalissimo’s anxiety about America’s true intentions reached new
heights in early November 1949, when, on Washington’s instructions, John
MacDonald presented him with a National Security Council demarche (NSC
37/8). This latest policy paper specified that the future American attitude
toward Taiwan, especially the provision of augmented economic assistance,
would hinge on “an improved performance and maximum self-help” on the
part of the Nationalist government. According to MacDonald, on receiving
the demarche, Chiang seemed pleased that it was delivered to him, not
anyone else within the KMT. MacDonald interpreted Chiang’s pleasant mood
as the result of a positive sign that Washington was now “willing to deal with
him again,” and that Chiang had after all not been abandoned by his “old
friend and ally.”53 Chiang’s personal diary, however, draws a totally
different picture. He found this demarche preposterous and regarded it a
“face-saving” gesture on the part of George Marshall, who apparently tried
to amend a broken relationship with him after the publication of the China
White Paper a few months earlier.54
On November 19, 1949, at the invitation of John Leighton Stuart and
General Albert Wedemeyer, General Zheng Jiemin, Chiang’s faithful
intelligence chief and vice minister of National Defense, flew to Washington
to ask key political and military chiefs to aid ailing Nationalist China. At one
crucial meeting, Vice-Admiral Oscar C. Badger, a special advisor to the
Pentagon, conveyed the following message: If Chiang would agree that Chen
Cheng be replaced by K. C. Wu, he could expect American economic and
military aid to help the new governor launch genuine reform in Taiwan. This
aid would include, among other things, an economic advisory group to Taipei
and enough military materiel to replenish six Nationalist army divisions
under Sun Liren.55 Ostensibly, the consensus now at Washington was indeed
that Sun, rather than Chen Cheng, should lead the island’s military.
 THE ABORTIVE YUNNAN INDEPENDENCE MOVEMENT

General Albert Wedemeyer had urged Chiang to make K. C. Wu Taiwan’s

new governor since May 1949. Now Washington attributed the Nationalists’
two recent wins on the islands of Quemoy (Jinmen) and Dengbu (off
Zhejiang) to the new divisions trained by the capable Sun Liren. As such,
Washington believed, Sun should be given full responsibility for Taiwan’s
future military defense.56 In his confidential report to the State Department,
John MacDonald gave a rather unconvincing account that, to show his
sincerity toward the American advice, Chiang had delivered a secret
message to Washington via the American military attachés in Taipei that he
would be willing to turn over command of the remaining Nationalist troops
to the United States in return for a public statement from Washington that
would “allow wavering to cease, uncertainty to disappear.”57 This alleged
gesture of surrender generated a striking, if not false impression among
Washington’s top decision-makers that Chiang was sincere in handing over
power. In a retrospective memorandum by the State Department’s Office of
Intelligence Research dated March 8, 1950, it appears many in Washington
viewed Chiang’s willingness to reorganize Taiwan’s provincial and military
leadership as a crucial turning point, “making unlikely a coup of anti-Chiang
political and military leaders—[which was] a definite possibility around
October 1949.”58
The release of Chiang Kai-shek’s personal diaries allows us to piece
together the political jigsaw puzzle and see a more complete picture of the
historical landscape. On receiving Badger’s message, Chiang wrote about
his “deepest distress,” thinking that Taiwan’s future would be henceforth at
the disposal of the United States. Uncertain whether the island would come
under his firm grip, Chiang still hoped against hope that a territorial base of
his own could be established in Yunnan.59 But his endeavor was greatly
overshadowed by the PLA’s ongoing thrust into Southwest China, a
development that was contrary to his early prediction. In mid-October, Bai
Chongxi’s exhausted forces were no longer able to defend Guangzhou, and
the Nationalist capital city fell to the Communists. Although the seat of the
Nationalist regime was moved to Chongqing in Sichuan, the morale of both
Nationalist military and civil officials was rapidly disintegrating. By mid-
November, the Nationalist authorities in Sichuan were already at their wits’
end. Feeling no longer able to save a topsy-turvy situation, the frustrated Li
Zongren returned to his home province of Guangxi and refused to chair a
decomposing “central” government any more. Chongqing seemed
undependable, but pathetically, no Nationalist officials at this juncture were
able to point to safer headquarters.60

5.3 Chiang Kai-shek (middle) summons local Nationalist officials in Chongqing for Southwest China’s
last defense against the People’s Liberation Army, ca. November 1949. (Courtesy of the KMT Party
History Institute)

To Chiang Kai-shek and his core staff, the loss of the mainland would
very likely lead to the loss of the Nationalist regime’s international status and
credibility, and therefore they desperately wanted to give Yunnan a last try.
On November 14, Chiang flew to Chongqing to supervise the shaky local
defenses. In Sichuan, he assigned a Japanese ex-military officer named
Tomita Naosuke the task of initiating the last defensive operation against the
approaching Communists.61 Although Naosuke’s plan was never
implemented due to the unexpected mutiny of the Nationalist garrison forces
on the southern outskirts of Chongqing, Chiang was impressed with his
expertise.62 This episode also marked the beginning of Chiang’s employment
of personal military staff from a recent enemy country. Before long, a group
of informal Japanese military advisors under the leadership of Tomita
Naosuke began operating quietly in Taiwan, and they would continue to do so
in decades to come.
The fall of Chongqing on November 30 sent Chiang and his stalwarts
some 167 miles away in western Sichuan to Chengdu, which would become
Nationalist China’s last official capital on the mainland. The very next day, in
a desperate attempt to secure the generals’ promise to make their last stand in
the southwest, Chiang summoned these regional leaders to Chengdu for an
urgent meeting. Lu Han not only refused to join, but he also turned down
Chiang’s offer to make him head of Nationalist bandit pacification
commission in Yunnan and Guizhou provinces.63 As it turned out, Lu had a
wild idea in mind. On November 15, around the time Chiang arrived in
Chongqing, Lu sent an unidentified Yunnanese businessman to the U.S.
Consulate in Kunming. Apparently inspired by the recently approved MAP
program and by Washington’s statement that the U.S. government would aid
any local group in China that actively opposed Communism, Lu’s
representative secretly appealed Yunnan’s independence. According to Lu’s
proxy, if Washington was willing to help defend Yunnan’s territorial integrity,
the “top rank local government officials” would do anything required by the
United States. In other words, the provincial authorities would “break with
the Chinese government, accept American protectorate and troops, and
follow orders of American military, political and economic advisers.”64
 Upon receiving this message, the U.S. vice consul in Kunming, LaRue R.
Lutkins, urgently cabled the State Department for clear instructions. Partly
sympathetic toward Lu Han’s difficult position and his independence
proclivity, and partly worrying that the recent detention of the American
consular staff in Shenyang would be repeated in Kunming, Lutkins warned
the State Department chiefs that refusing this proposal might “virtually affect
an immediate situation here and evacuation of consulate personnel.”65 A
week later, Dean Acheson, after having discussed the situation with the Joint
Chiefs of Staff, rejected the appeal, arguing that it was impossible for the
local Nationalist armed forces to prevent the Communists from advancing
into the west, and that Yunnan’s geographical remoteness made delivering
any U.S. military provisions and other supplies highly impracticable.
Meanwhile, Lutkins was instructed to inform Lu Han’s man that Washington
could not undertake any guarantee that would “represent far reaching
commitment involving direct intervention in China’s internal affairs.”66
5.4 LaRue R. Lutkins (right) in 1964. He was deputy chief of mission at the U.S Embassy in Sri Lanka,
serving under Ambassador Frances E. Willis (left). (Courtesy Frances E. Willis Papers, Hoover
Institution Archives)

On November 28, as the fall of Chongqing became unavoidable, Lu Han

sent his man to see Lutkins for one final appeal. Lu’s representative stressed
that any type of aid from the United States would prove effective and that it
would not be necessary to send American troops. In addition, Lu was willing
to declare Yunnan’s independence first, and then ask for American
protection, a move that Lu believed would not constitute an “intervention” on
the part of the United States.67 But Washington remained unmoved. Seeing
this, Lu Han swiftly decided to transfer his political allegiance. On
December 9, Chiang Kai-shek sent his close confidant Zhang Qun to check Lu
Han’s reliability and make arrangements for the arrival of Nationalist troops
being airlifted from Sichuan to facilitate the withdrawal of Nationalist
headquarters in Kunming. Fearing a genuine entry of Chiang’s authority into
his domain, Lu placed Zhang and his entourage under house arrest.68 The next
day, Lu radioed other Sichuan generals to join him in kidnapping Chiang. In
despair, Chiang, accompanied by his son Ching-kuo and a dozen of his
closest aides, took off for Taipei before any kidnapping could take place,
never to set foot on the mainland again.69
Before leaving Chengdu, Chiang was still planning to transfer Hu
Zongnan’s troops from Sichuan westward into Xikang province, where he
sought to establish a military stronghold in Xichang and continue his
mainland resistance.70 But Lu Han’s sudden defection and the resultant loss
of Yunnan shattered such a dream. In his personal journal, Chiang
remorsefully blamed his own misjudgment and naivety about Lu, attributing
Lu’s “capriciousness and mistrustfulness” to the latter’s “frontiersmen
nature.” Chiang confessed he had learned a bitter lesson, admonishing
himself that henceforth he should act according to “realpolitik,” rather than
moral appeal, when dealing with internal and external affairs.71 Chiang might
be right about his belated judgments, but when lamenting the entire fiasco of
Southwest China, he probably never knew that the United States played a
role, albeit indirectly, in catalyzing Lu Han’s ultimate betrayal at the final
hours of Nationalist China on the mainland.
 6
Floating State, Divided Strategy

THE DEFECTION OF Yunnan Governor Lu Han and other Nationalist military

leaders in Southwest China left Chiang Kai-shek with no option but to leave
the Chinese mainland. The diplomatic and political events in China’s
southwestern provinces in late 1949 not only accelerated the pace of the
Chinese civil war but also helped create the accidental Nationalist state of
Taiwan. Retreating to the island became an unavoidable for Chiang and his
followers. But even so, Chiang remained rather skeptical as to whether
Taiwan was a secure place of shelter. In this regard, the U.S. attitude
remained a grave concern for him.
On December 4, 1949, while still in Chengdu, Chiang dispatched his
trusted men to Taipei to further evaluate the local situation; up to this point,
plans were underway aimed at withdrawing the national capital westward to
Xichang in Southwest China.1 Meanwhile, Muslim forces recently retreating
from Northwest China into southern Xinjiang, where the creation of another
anti-Communist territorial citadel was under consideration, had momentarily
elevated Chiang’s hopes of staying on the mainland.2 This hope proved
ephemeral; by December 6, Xichang was surrounded by local bandit forces
and was no longer a secure place. Having no alternative, Chiang departed for
Taipei, ready to face the United States over the future of the island and his
own fate. When the first Executive Yuan meeting was convened in Taipei on
December 12, 1949, Nationalist China’s de facto territorial domain consisted
only of Taiwan, Hainan, small segments of southern Xikang and southern
Yunnan, and a string of offshore islands from Zhoushan down to the South
China Sea. As K. C. Wu reminisced, Chiang was frequently in an extremely
anxious state of mind; these island territories were the only residue of a huge
empire he once possessed and governed, and no one in the near-bankrupted
Nationalist mechanism was certain about their defensibility.3
Among the earliest compromises Chiang made with the United States was
the rearrangement of Taiwan’s new provincial leadership. On December 24,
1949, Chen Cheng reluctantly handed over the governorship to K. C. Wu. In
his personal memoir, Chen bitterly recalled his strong belief that it was
extremely unwise to reorganize the Taiwan provincial government at this
critical moment. And yet, for the sake of the collapsing Nationalist regime’s
dire relations with the United States, Chen said he was willing to back down
and resign.4 Chen’s bitterness was a vivid contrast to the elated and confident
attitude of K. C. Wu, who now thought that he had the full support of
Washington. On the eve of his inauguration, Wu secretly met with American
consular officials in Taipei, to whom he pledged to fully cooperate with
General Sun Liren in bring about genuine and satisfactory reform. In return,
Wu urged that the promised American aid, especially political and military
advisors, be dispatched to Taiwan without delay.5 These underground
communications only increased Chiang’s strong suspicion and uneasiness. On
January 5, 1950, Sun Liren secretly informed an anonymous American
military attaché in Taipei that the Generalissimo had learned about his
“reported plan for coup.” Sun said that he had told Chiang that this was a
rumor inspired by the Communists, and suggested Chiang thoroughly
investigate the source of the rumor and that all possible Communist elements
be driven out of Taiwan. Sun then told the military attaché that Chiang
apparently believed his words as much as he believed anyone.6
As Li Zongren was in the United States for medical treatment, Nationalist
China had constitutionally become a state without a head. In early February
1950, Li informed Taipei that, for health reasons, he had to remain in the
United States. In reality Li was by no means willing to return to a place
where Chiang Kai-shek was trying to take full command. Chiang had now
decided to resume the presidency, which led Li and his followers denounced
as “illegal,” “rebellious,” and a substantial “coup d’état.”7 Li undoubtedly
tried to win back his political legitimacy; a luncheon meeting with President
Truman, Dean Acheson, and Louis Johnson was arranged in late February
through Gan Jiehou, Li’s aide in Washington. On March 2, while Li was
being entertained at Blair House as Truman’s “special guest,” across the
Pacific Ocean, in Taipei, Chiang Kai-shek and his wife stood on the balcony
of the presidential palace, gleefully waving to a crowd of some 100,000
“enthusiastic citizens” who gathered to celebrate Chiang’s resumption of
office.8
Indeed, at this critical moment, Washington’s policy toward the barely
surviving Nationalist China and its divided leadership was opaque and
perplexing. Edward Martin, then an economic adviser in the U.S. Embassy in
Taipei, recalled that he and his colleagues were frequently puzzled by the
American policy toward Taiwan. They could not understand what it was
supposed to do, and felt rather unhappy about not getting clearer messages
from Washington.9 On the eve of Chiang’s return to presidency, it appeared
that using drastic means, including an assassination or coup, to remove
Chiang had momentarily become an option. According to Chiang’s own
account, a coordinated plan to remove him from Taiwan was orchestrated by
certain inner-circle moguls from both London and Washington. V. K.
Wellington Koo, Nationalist Chinese ambassador to the United States, was
approached by an unidentified Briton who urged him to persuade Chiang to
hand over power to “three specially designated Nationalist figures on
Taiwan” and leave the island for good. The reward for Chiang’s exile,
according to this person, would be a luxurious cruise ship worth $4 million.
The next day, this person invited Koo to a luncheon with Allen Dulles, who
would become director of the CIA a few years later. Although nothing more
about Chiang’s removal was discussed during the luncheon, Koo was
convinced that Washington’s intelligence chiefs were aware of the secret
British proposal.10
 Chen Cheng, now a relatively innocuous figure compared to Sun Liren,
was awarded the premiership of the resettled Nationalist government in
Taipei. In the meantime, Chiang might have implicitly sought to use Chen to
checkmate K. C. Wu, whom Chiang now thought “too popular abroad.”
Predictably, Chen’s appointment caused the uneasy and angered Wu to
threaten to resign from the provincial governorship, a position
constitutionally subordinate to the premier.11 The tension between Chen and
Wu was not just personal or emotional, but also institutional; the move of the
Nationalist seat to Taiwan indicated that there was now a skeleton central
government in exile superimposed on a much larger and well-functioning
provincial mechanism. As the positions of premier and provincial governor
inevitably overlapped and conflicted in various ways, a power struggle over
the island’s tax revenues and other crucial resources was a natural and
unsurprising consequence.12
During the first weeks after resuming the presidency, Chiang Kai-shek
became so frustrated when mediating between Chen Cheng and K. C. Wu that
he frequently threw his hands up in disgust. In his diaries, a dispirited Chiang
scoffed at his premier’s “narrow-mindedness and unyieldingness,” while
criticizing his provincial governor as “overbearing” and “egotistical” for
accepting foreign backup. But Chiang was unable to come up with a solution
to the power struggle.13 Indeed, tensions grew to such heights that, in a
private dinner meeting in late April 1950 with Robert Strong, the American
chargé d’affaires, Wu expressed his gravest concerns about continuing his
“almost heartbreaking” job as a provincial governor. Surprisingly, as
revealed in Strong’s report to Washington, a pessimistic Wu frankly admitted
that there was little doubt that Taiwan would not last beyond the spring of
1951, and subsequently “questions of visas for both [his] wife and [him]self
[to] visit [their] daughters in the United States entered [the] conversation.”14
In the Nationalist military establishment too, fierce competition, mistrust,
and suspicions prevailed in all corners of the island. To everyone’s surprise,
the U.S.-favored Sun Liren was not made Chiang’s new chief of staff.
Instead, Sun was only appointed commander-in-chief of the Nationalist
Ground Forces, and his duties were largely confined to military education
and training programs. Sun was outraged with this appointment as it was
merely a window dressing to attract American support for Chiang. An
extremely reluctant and unhappy Sun accepted the new post only after Chiang
assured him that the newly arrived U.S. ammunition, if it were to be sent to
Taiwan, would go first to Sun’s forces stationed in the southern part of the
island.15
The Nationalist military chiefs seemed to hate their fellow comrades as
much as their deadly Communist enemies. In a private conversation with the
U.S. military attachés in Taipei in late April 1950, Sun Liren strongly
condemned General Zhou Zhirou for dancing “100 percent to the tune of
Chiang,” who made him chief of general staff nonetheless, still giving Sun
poor cooperation. Sun did not hesitate to disclose to the Americans that
Nationalist troops stationed on the islands of Zhoushan, Quemoy, and Hainan
were made up of at least 20 percent “paper” (nonexistent) soldiers, while he
was having great difficulty getting supplies for his troops. Sun thundered that
this was due entirely to his complete lack of control over the military
decision-making.16 The purpose of these complaints, it appears, was to try to
secure Washington’s concrete support and strengthen Sun’s position on
Taiwan.
Given Sun Liren’s extraordinary foreign background, Chiang Kai-shek’s
mistrust of him is easy to comprehend. But it should be noted that Chiang was
equally distrustful of other high-ranking military officers. Around late
February, Chiang ordered the execution of his deputy chief of general staff,
Wu Shi, who had been found guilty of spying for the Chinese Communists.
Then in mid-March 1950, shortly after Chiang resumed the presidency, it was
reported that a major-general in the Nationalist Defense had allegedly
headed a group of about twelve conspirators attempting to assassinate
Chiang. As one U.S. confidential telegram from Taipei to Washington
reveals, a time bomb attached to Chiang’s limousine exploded just after he
left the car.17 Even Chen Cheng was said to have very distasteful relations
with Chiang; speculations had it that Chiang’s appointment of Chen as
premier was intended to weaken Chen’s military power on the island “by
kicking him upstairs out of immediate military control.”18 The political chaos
within the Nationalist hierarchy, accompanied by a deteriorating financial
outlook, led K. C. Wu to assert that, by early 1950, the eventual collapse of
the Nationalist regime in Taiwan was more a certainty than a probability.19
 HAINAN ISLAND AND THE OTHER NATIONALIST AUTHORITIES

The schism among high-ranking Nationalist authorities was not confined to

the island of Taiwan. The Nationalist remnants on the Hainan Island had
unwittingly and embarrassingly posed a serious threat to the unity and
survival of the precarious Nationalist state. By late 1949, in addition to
Taiwan, Hainan had become a major haven for Nationalist troops retreating
from the mainland. Since undertaking Hainan’s governorship in March that
year, Chen Jitang had endeavored to make the island another strong territorial
citadel outside Chiang Kai-shek’s sphere of influence. Chen was convinced
that he might one day become Free China’s supreme leader, if he could hold
on to Hainan for a few more years, when he expected World War III would
break out between the West and the Communist bloc. His naivety and
optimism about Hainan’s effective defense stemmed in part from the fact that,
in late 1949, the PLA still lacked air and amphibious capabilities to invade
the island. Militarily, the strength of the local Hainan Communist guerilla
forces was relatively weak in comparison with Chen’s well-equipped,
70,000-odd Nationalist troops.20 Meanwhile, Chen shared a common belief
that Washington had virtually abandoned Chiang Kai-shek and instead would
support any regional leaders who were both willing and capable of resisting
the Communists, including himself.21
The fall of Guangdong in October 1949 placed Hainan in an increasingly
difficult position. Bai Chongxi’s 300,000 soldiers, which he originally
intended to withdraw from Central China to his home province in the
southwest, were largely annihilated on the Guangdong-Guangxi border, and
only a few surviving divisions managed to retreat to Hainan and French-
controlled Vietnam.22 As 1950 began, approximately 80,000 Nationalist
troops belonging to various political factions loyal to different military
leaderships were already on the island. Having moved his provincial seat to
Hainan as soon as Guangzhou was lost, the exiled Guangdong Governor Xue
Yue was made commander-in-chief of the Hainan military defense and took
over the island’s military command. The resultant power struggle between
Xue and Chen Jitang grew to such an incredible extent that, around late 1949
and early 1950, the American intelligence unit gloomily predicted that the
discontented Chen might soon turn over Hainan to the Chinese Communists.
According to the CIA, Chen sent a secret message to the newly arrived
Communist authorities in Guangdong, offering to arrange a peaceful handover
of Hainan on condition that his personal property and assets in Guangzhou
were protected and returned to him, and that he would be allowed to remain
Hainan’s governor for six months after the Communist takeover. The
Communists turned down Chen’s proposition and reiterated their demand for
an unconditional surrender.23
Presumably as a result of the Communist rejection, Chen Jitang could only
show his determination to secure the island, contrary to his fallback position
(surrendering to the Communists). In mid-January 1950, Chen wrote to
Senator William Knowland, appealing for immediate U.S. aid to Hainan.
Chen cleared the air with Knowland by stating that the Nationalist high
officials on the island were united and cooperative. He added that all the
troops were “high-spirited and willing to die for the island,” and were now
entrusted to the command of Xue Yue, to whom Chen “automatically”
surrendered his post as commander-in-chief of Hainan’s military defense.
Chen also stressed that Taiwan and Hainan were the last two island bastions
of anti-Communist forces in China, and he regretted that the outside world
did not recognize Hainan, which he believed had more natural resources than
Taiwan, having richer land, abundant mineral resources, and unlimited
agricultural products, and therefore, strategically, was equally important.24
Around the time Chen sent his letter of appeal, Gan Jiehou in Washington
also wrote to the State Department and sought support for Hainan’s cause.
Apparently on Li Zongren’s instructions, Gan argued that in view of the
number of troops deployed in Hainan and its strategic position, this island
stronghold was no less significant than Taiwan for the ultimate recovery of
the mainland. Gan therefore urged that equal attention be paid to the defense
of Hainan as to Taiwan.25
At one point, in Washington, discussions about giving more substantial aid
to the Nationalists in Hainan were underway, and this disturbed Chiang Kai-
shek tremendously. In Chiang’s eyes, Hainan had long been the turf of the
Guangdong Clique, and even Li Zongren and the Guangxi Clique were in a
stronger position than Chiang to claim that island. Chiang fully realized that
even if Hainan was to be held, his influence on the island’s affairs would
only be tenuous and limited. Yet during the first few months of 1950, when
Nationalist morale was close to a breakdown, Chiang was in no position to
abandon Hainan because of a very implicit and politically subtle reason.
When a flurry of underground operations were being planned in Taipei,
Hainan was still designated as an important anti-Communist island
stronghold, where a KMT-backed “Free China Labor Union” (Ziyou
Zhongguo Laogong Tongmeng) branch office would be established, and
where a large wireless station would soon be installed for future Nationalist
espionage in South and Southwest China.26 Nevertheless, from a pragmatic
point of view, the very fact that Hainan was 800 miles from Taiwan and only
10 miles from the mainland suggested that, in the event of a Communist
invasion, no effective logistic support could be mounted from Taiwan. It was
scarcely surprising that, shortly after the Nationalist center moved to Taipei,
in January 1950, Chiang had very quietly ordered his aides to draft
withdrawal operations in anticipation of Hainan’s eventual abandonment.27
The coexistence of the two essentially independent Nationalist island
authorities constituted a thorny issue for Chiang Kai-shek and the officials
surrounding him. By the spring of 1950, the nascent Communist rule in the
southern regions of Guangdong Province still showed signs of considerable
instability. In Leizhou Peninsula, opposite Hainan, the economic and
monetary situation had deteriorated to a point that the area was noticeably
restless; PLA troops were no longer allowed in the cities at night and their
camps on the outskirts were heavily guarded.28 In early March 1950, Xue
Yue’s forces repeatedly repelled Communist attempts to land on the northern
shore of Hainan. Moreover, Nationalist naval patrols destroyed Communist
wooden boats seeking to approach the island several times, while the air
force continued to bomb PLA bases along the southern Guangdong coast.29
To sustain Hainan’s finances, Chen Jitang and Xue Yue managed to sell
600,000 tons of the island’s iron ore to Japan, and Hainan military leaders
were busy flying between Haikou, the provincial capital, and Taipei to
solicit more military and economic aid.30
Around late March and early April 1950, the outwardly improving
situation in Hainan momentarily led some in Washington’s intelligence
quarters to decide that the danger of an immediate invasion of the island was
“more remote than ever.”31 Even policy planners in the State Department
shared this ephemeral optimism. In a memorandum drafted by the
department’s Policy Information Committee on April 12, the situation in both
Zhoushan and Hainan was depicted as “stabilized,” and in no danger of
immediate collapse.32 It took a private national policy formulation, chiefly
orchestrated by an “unofficial” American advisor, to decisively bring about
the total abandonment of Hainan permanently in May 1950, before the
Communists invasion of the island fully materialized.
 NSC 48 SHOWS CHINA POLICY STILL UNSETTLED

The Communists’ sweeping victory on the Chinese mainland not only

disrupted the surviving offshore Nationalist authorities, but also divided
Washington’s military and foreign policy establishments. In the final weeks of
1949, Chiang Kai-shek and his core officials in Taipei might have been
unaware that, just when they thought they would get support from the United
States following the crucial meeting between Oscar Badger and Chiang’s
intelligence chief Zheng Jiemin in Washington and the resultant
reorganization of the Taiwan provincial government, interdepartmental
debates in Washington over the policy toward Taiwan made Badger’s
verbally promised delivery of military aid virtually impossible. Still, in
early December 1949, partly pressed by Chiang’s supporters in the United
States, and partly anxious that the Communist triumph in China would be
total, the Defense Department pushed for a more assertive approach to
keeping Taiwan out of Mao Zedong’s clutches. Policymakers in the Pentagon
contemplated how to make the most effective use of $75 million in a “303
fund” earmarked for the “general area of China” under the 1949 Military
Assistance Program. They had also neared completion of National Security
Council (NSC) 48, a comprehensive policy paper for Asia that had been in
progress for a number of months.33 In Tokyo, General Douglas MacArthur let
it be known that he thought Taiwan ought to be held because of its strategic
value. As modern scholars now agree, the Far Eastern commander also
displayed a penchant for independent action toward the Nationalists’ island
stronghold.34
On the day that K. C. Wu assumed governorship of Taiwan in Taipei, the
Joint Chiefs of Staff, with the idea of launching a “modest, well-directed and
closely supervised” program for China which had been advanced earlier,
now called for concrete military assistance for Taiwan and an immediate
survey of its defense requirements.35 In the meantime, in the State
Department, a confidential memorandum drafted by Assistant Secretary of
State W. Walton Butterworth drew a rather different conclusion. Butterworth
pointed out straightforwardly that no new convincing military-strategic
reason could be found to diverge from the American nonmilitary policy
toward Taiwan. Responding to the military’s argument that Taiwan was
“useful in deflecting Chinese Communist expansion” in East Asia, the
memorandum, presumably taking Lu Han’s recent defection into
consideration, argued forcefully that the primary threat in Taiwan was from
infiltration and subversion, rather than invasion. As a result, American
military action might postpone a Communist takeover but could never prevent
it. Moreover, such action would carry an unacceptable political price for the
United States: loss of prestige for visibly trying and failing to retain the
island, a tarnished reputation in Asia for backing a discredited regime, and a
reputation as the new Soviet Union, “the imperialist menace to China.”36
On December 29, 1949, after making certain that he had the president in
his corner, Secretary of State Dean Acheson easily blocked the Joint Chiefs
of Staff’s recommendation at a Blair House session with military leaders.
Using the arguments in Butterworth’s memorandum, Acheson emphasized that
the bankrupt Nationalists might succumb to the same internal decline on
Taiwan that had affected them everywhere on the mainland.37 The military
chiefs were silenced later that same day, when the National Security Council
took final action on NSC 48, and the State Department won approval for a
reaffirmation of nonmilitary policy as a part of NSC 48/2.38 Truman
relentlessly criticized Chiang Kai-shek and his Nationalist followers as
“about the rottenest government that ever existed,” and the decision to sustain
the nonmilitary policy, as contemporary literature argues, amounted to a
virtual abandonment of Taiwan and the Nationalists on it.39
Given the heating up of the Cold War in Europe and attendant concerns,
notably the Berlin Blockade and the success of the first Soviet atomic test,
the NSC 48/2 decision was entirely understandable. In the face of growing
pressure from leading Republicans and the China lobby to increase aid for
Chiang Kai-shek, President Truman and Dean Acheson concluded that the
time had come to curb the incessant speculation. Truman issued a press
statement on January 5, 1950, to the effect that Taiwan was clearly Chinese
territory and that the United States harbored no ulterior motives concerning
Taiwan. There would be no involvement in the Chinese civil war, nor would
military assistance or advice be furnished to the Nationalists on Taiwan.40
Acheson quickly followed with a major speech, delivered on January 12, in
which he described Taiwan and South Korea as “not within the U.S. defense
perimeter,” reiterating that no U.S. military support would be given to the
Nationalist remnants on the island.41 With little question, such blunt
statements from the United States were like a death sentence for the
Nationalists in Taiwan. The Nationalist Foreign Ministry was instructed to
lodge a strong protest with the U.S. Embassy in Taipei, but the protest fell on
deaf ears.42
As hopes for securing American aid evaporated, everyone in Taipei’s
high political circle now seemed cynical, and a sense of deep betrayal was
fast growing. The fact that Washington did not highlight the unsettled legal
status of Taiwan clearly suggested that the island would eventually fall to the
Chinese Communists and a Chinese Titoism might follow. Chen Cheng, in his
personal memoirs, recalled Truman’s piercing words in early 1950, along
with the U.S. refusal to render military assistance, as disillusioning a few
“unrealistic” and “irresponsible” politicians on the island. He was referring
to the “overbearing” K. C. Wu, who, in Chen’s view, harbored evil ambitions
to use American support to bolster his political power on the island. As Chen
saw it, the public statements made by Truman and Acheson only proved that
Wu was “clownish,” “hubris-minded,” and “politically naïve.”43
Chen Cheng’s bitter complaints about his chief political rival and the
American backers are fully understandable. It should be noted, however, that
while making K. C. Wu and Sun Liren the candidates to cultivate within the
Nationalist hierarchy, some in Washington’s higher circles also favored
supporting elements outside the KMT. The story of Thomas Liao (Liao
Wenyi) and his cohorts demonstrates how the relationship between pro-
independence Taiwanese and the United States evolved when the collapse of
the Nationalist government seemed imminent, and how the U.S. policy
toward Taiwan was divided and unsettled. Shortly after the mass uprisings
that began in Taipei on February 28, 1947, Liao and his associates organized
the Formosa League for Re-emancipation (FLR) in Shanghai and petitioned
the United Nations to place Taiwan under its trusteeship as a prelude to
independence.44 When General Wedemeyer visited Taiwan in the summer of
1947, Liao gave him a petition letter to the effect that people in Taiwan
should have the right to decide their own future. Although no official
response to Liao’s appeal was made by the United States, his voice began
attracting the attention of the international mass media.45
Since the fall of 1948, core members of the FLR had resettled in Japan,
where they sought a more congenial environment for their Taiwanese
independence activities. Soon their contact with SCAP headquarters in
Tokyo, especially with MacArthur’s political intelligence personnel became
an open secret. With the tacit consent of the SCAP, on January 27, 1949, the
FLR publicly appealed for a comprehensive U.S. mandate for Taiwan, so as
to prevent the fall of the island to the Chinese Communists. This was the
clearest statement about the FLR’s political goals thus far.46 In March 1949,
having held several conversations with key FLR members in Tokyo, William
J. Sebald, MacArthur’s chief political advisor, cabled a top-secret report to
the State Department, in which he stated his belief that the tumultuous
situation in China at that time afforded an opportunity for interested groups,
notably Thomas Liao and the FLR under him, to exploit the independence
movement in Taiwan. It was also possible, Sebald noted, that a confused
situation in China might induce certain Nationalist military or political
leaders to use pro-independence feelings in Taiwan as a device to provide
them with an autonomous political stronghold or a new coalition government
between the KMT and the CCP.47
In the following months, important FLR elements were actively engaged in
lobbying for Taiwan’s independence. Thomas Liao was in Hong Kong,
where he garnered support from local consular officials of the United States
and the Philippines.48 Between May and September 1949, Peter Huang,
another key figure of the league, was first in Guangzhou and then in Taiwan,
where he held several important meetings with local American diplomats.
He told Lewis Clark that the FLR was leaving its choices open, eager to
collaborate with every possible leader or faction that was willing to fight for
Taiwan’s survival. Huang expressed his particular wish to establish direct
contact with General Sun Liren, who had headquartered himself in southern
Taiwan. Huang hoped for American support in putting the two parties in
direct contact.49
While in Taipei, Peter Huang informed U.S. Consul General John
MacDonald that the FLR was prepared to “sacrifice a hundred thousand
Taiwanese in a bloodbath uprising after which the United States could come
and take over.” He also claimed, unconvincingly, that General Sun Liren had
attempted to approach him and had agreed to support the FLR
wholeheartedly with arms and men. Huang thus urged Washington to render
financial assistance in order to facilitate FLR activities in Taiwan.50
MacDonald, however, was not impressed. In his cable back to Washington,
he described Huang as being “neither better nor worse than several other
Taiwanese independence leaders.” MacDonald observed that, after two
months’ stay in Taiwan, Huang was “pathetically un-informed on local
conditions and popular current thinking.” MacDonald maintained that the
FLR had supporters only at Taiwan’s lowest government levels, and there
was no indication that Sun Liren or other higher officials on the island would
support it. The American consul general’s conclusion was that the FLR was
by no means qualified to claim it represented the 6.5 million people on the
island, and therefore the U.S. government should not render any substantial
assistance.51
On September 2, 1949, in the midst of the alleged SCAP takeover of
Taiwan, Thomas Liao submitted detailed operation guidelines to Philip
Jessup, the ambassador at large at the State Department, in which Liao called
for an immediate SCAP temporary jurisdiction over Taiwan and the
Pescadores. Liao also suggested that he personally lead the provisional
Taiwanese government under the supervision of a military and political
advisory committee appointed by SCAP; that all the collaborators in the
KMT regime in Taiwan be purged; that people in different districts and races
on the island be assisted in establishing their own local governments; and
that a “Formosan National Defense Army” of 50,000 standing troops be
organized with SCAP training and supervision. To preserve Taiwan’s
political stability and to build up a new social order, Liao proposed that
8,000 American troops be sent to Taiwan, and that these troops be divided
into eight groups, stationed at eight different points, including five in the west
coast of Taiwan, two in the east, and one in the Pescadores. To help
Taiwan’s economic recovery, Liao unabashedly requested $60 million in
materiel aid and another $60 million in the form of investment from private
U.S. companies.52
As the Nationalists’ resistance on the Chinese mainland was rapidly
disintegrating in the fall of 1949, despite John MacDonald’s unfavorable
evaluation of Peter Huang, higher-level policy planning staff in the State and
Defense departments did view the FLR as one potential force instrumental in
collaborating with K. C. Wu, Sun Liren, and other Taiwanese elites within
the KMT power structure and carrying out a genuine reform in Taiwan. In
mid-November, Peter Huang informed Donald Edgar, the U.S. consul in
Taipei, that Thomas Liao had received a response from President Truman,
privately advising the FLR to cooperate with liberal elements of the
Nationalist government.53 It remains unclear whether Liao’s claim was
merely self-serving, but to many of Liao’s associates, this sounded like a
positive signal from the White House. In the first week of January 1950,
consequently, notable Taiwanese elites within the KMT, including Qiu
Niantai, Lin Xiantang, Wu Sanlian, and Yang Zhaojia, were so active in their
secret liaisons with Peter Huang that speculation had it the FLR would soon
be integrated into the reformulated Taiwanese provincial authorities under K.
C. Wu, with its members playing a greater role in the island’s future
politics.54 In an internally circulated memorandum prepared on January 6,
1950, planning-level officials in the State Department argued that if the
current reform trend led by K. C. Wu was sincere and effective, some
accommodation between the Taiwanese and the Nationalists might be a
possibility.55 With one of the most important functions of the U.S. diplomatic
representation on Taiwan now to get access to as many FLR members as
possible, David L. Osborn, American vice consul in Taipei, was soon made
key liaison between the Consulate General and the league. It is worth noting
that, to facilitate Peter Huang’s activities in Taiwan, Osborn went so far as to
arrange this prominent FLR figure to work undercover, as a fieldworker and
interpreter for the U.S.-backed Joint Commission on Rural Reconstruction in
Taiwan.56
On January 12, 1950, while Dean Acheson reiterated Washington’s
unwillingness to risk incurring the anger of the Chinese people over
perceived imperialist intervention in China’s domestic affairs, Robert
Strong, the State Department’s chief representative in Taipei, held a
clandestine discussion with a group of FLR leaders. The FLR handed over to
Strong a four-point proposal: the denunciation of the 1943 Cairo Declaration;
the establishment of a provisional Taiwan government; a coup initiated by
Sun Liren on behalf of the Taiwanese people; and the founding of a new
Taiwanese army to defend the island. According to Strong, the significance
of this meeting was that these FLR members were accompanied by Yang
Zhaojia, a heavyweight member of K. C. Wu’s new provincial authorities
who also enjoyed a very high reputation among the Taiwanese people.57
The January 12 meeting was followed by a secret rendezvous between
Robert Strong and James Chen, another key FLR member, on January 26.
According to Strong’s confidential dispatch to Dean Acheson, Chen informed
the American chargé that Taiwanese elites within and outside the KMT were
organizing a “Taiwanese Democratic People’s Association” under the
leadership of Lin Dingli, former station chief of the notorious KMT
Investigation and Statistic Bureau in Taipei. Using Lin’s unique intelligence
background within the KMT party, Chen naively thought that Chiang Kai-shek
might finally consent to the presence of this association and that, when its
position was consolidated, the association would replace Lin with General
Li Liangrong, the former governor of Fujian Province who had recently
played a brave role in expelling the invading PLA from Quemoy. James Chen
revealed that the ultimate goal of the association was to declare Taiwanese
independence, and he claimed that U.S. support for the association was the
most critical factor in achieving this goal.58
Although Robert Strong responded by saying that Washington would not
make any substantial commitment to such underground activities, he
nevertheless told James Chen that he was ready to hear any suggestions or
options regarding Taiwan’s future. Two weeks later, James Chen returned
with a further claim that Chiang Kai-shek and K. C. Wu had verbally agreed
to the establishment of the Taiwanese Democratic People’s Association, and
he asked for Washington’s firm endorsement. The first reaction from the U.S.
chargé was positive; in his telegram dispatch to Washington, Strong
highlighted that the organizational form of this new association was of
interest to the United States, because it would provide a working government
on provincial and local levels, “should any effort [to] take power be
successful.”59 In the weeks that followed, it seemed K. C. Wu and the FLR
were competing to win the goodwill of the American embassy in Taipei and
thus claim leadership of the association. But Washington’s attitude remained
undecided. Even though James Chen repeatedly asserted that the founding of
the association had Chiang Kai-shek’s approval, and that Chiang even
supported the idea of forming a new Taiwanese army, the State Department
had serious doubts about Chiang’s involvement, as well as about the
association’s possible role in strengthening the island’s military and political
position.60
 THE UNDETERMINED PARTY REFORM

Predictably, Chiang Kai-shek was both annoyed at, and fretted about the
underground contacts between certain Taiwanese elites and the American
diplomats in Taipei. He deemed such contacts an “evil intrigue” on the part
of the United States aimed at encouraging Taiwan’s separation from China.61
However, to convince Washington that genuine reforms were in the offing,
Chiang needed to make a compromise. In mid-March 1950, Chiang sent his
trusted national security chief, Tang Zong, to convey verbally to Robert
Strong that he was pleased to see more Taiwanese elites would be
participating in Taiwan’s political affairs as a result of the Taiwanese
Democratic People’s Association.62 Chiang’s apparently encouraging attitude
momentarily inspired Taiwanese elites both within and outside the
Nationalist bureaucracy. Almost simultaneously, the Nationalist government
announced that elections at local levels would be launched throughout
Taiwan in the foreseeable future, a giant step toward the island’s eventual
democratic, local governance.63
While welcoming these new developments on the island, Robert Strong
was realistic about the possible results. On April 4, the day he was invited
(but ultimately rejected) to be present at the inaugural ceremony of the
Taiwanese Democratic People’s Association, Strong cabled the State
Department, predicting that the organization would produce three
consequences: The Taiwanese “half-mountain” people would use it to gain
political power; the initiators such as Lin Dingli, James Chen, and other FLR
cohorts would then be regarded as having conspired to overthrow the
Nationalist government; and Chiang Kai-shek would gradually penetrate the
association to blunt any potential threat and eventually to use it for his own
purposes.64
Strong’s prediction about the ultimate fate of FLR members proved to be
largely correct. Toward the end of May 1950, Chiang Kai-shek became
aware that certain Taiwanese officeholders within the government, including
Yang Zhaojia and Wu Sanlian (then serving as Taipei’s city mayor), were
closely related to the FLR and the Taiwanese independence movement. The
astonished Chiang realized that something must be done urgently. With
“national security” as a perfect justification, his son Ching-kuo ordered the
arrest of nineteen key FLR members, including Thomas Liao, Peter Huang,
and James Chen.65 Although no immediate action was taken against Yang
Zhaojia or Wu Sanlian, by the middle of May collaboration between the
separatist FLR and K. C. Wu’s provincial team had become little more than a
fantasy.
Less well known is that Chiang Kai-shek briefly contemplated total
abandonment of the KMT party shortly after the Nationalist seat was moved
to Taipei. In early January 1950, Chiang formed a study group, consisting of
his most trusted advisors, to draft a plan for party reform. Exactly two years
before, Chiang had criticized the KMT as “decrepit,” “degenerated,” and
“lacking in spirit, in discipline, and in standards of right and wrong.” He
concluded by saying that “this kind of party should long ago have been
destroyed and swept away.”66 Now, in a meeting at Chiang’s reclusive resort
at the Sun Moon Lake in central Taiwan, the attendees belatedly agreed that
reforms within the KMT party were crucially necessary in order to rescue
both the party and the state. Chiang’s advisors specified that, to attract more
talented people to serve and improve the party leadership, the reform
timetable should stress the importance of the party being a new organization,
with new party guidelines, new demands, and new tasks.67 But Chiang’s
original idea was far more drastic. Realizing that reform in the demoralized
KMT mechanism was unpromising, he thought instead about building a new
party, which he tentatively called the “China Democratic Revolutionary
Party” (Zhongguo Minzhu Gemingdang), while the old KMT party would be
allowed to continue. With such a dual device, Chiang thought of creating a
favorable image by implementing a multiparty democracy in Taiwan, thus
attracting wider support from both within and abroad. More realistically for
the convenience of political maneuvering, Chiang could reconstruct his
leadership in the new party, while rejecting the uncooperative KMT party
veterans and clique members and placing his old rivals in the virtually
defunct KMT party machine.68
During the first months of 1950, Chiang’s inability to effectively dominate
the party and the state frustrated him immensely. Despite precarious military,
diplomatic, and national security conditions, intense arguments and bitter
recriminations continued within the party and the government. The struggle
between Chen Cheng and K. C. Wu over who should control overlapping
provincial and state financial affairs remained unresolved even after Chiang
had resumed the presidency. These disputes were followed by another bitter
rivalry between the executive and legislative branches of the central
government, when a group of legislators refused to approve an emergency
bill that would give Premier Chen Cheng more authority to manage the crisis.
The controversy led the angered Chiang, who was at his wit’s end, to
reproach his party members as being “rude and unreasonable.”69 As the
crisis on the island lingered on, more government officials and party
members backed away from radical political reform, as they feared that the
little power they still enjoyed might soon be transferred to other party
members. Chiang was obliged to shelve party reform for the time being.
 MANAGING THE MAROONED MAINLAND FORCES

During the first half of 1950, issues surrounding the management of the
depleted Nationalist forces posed yet another grave challenge to the Taipei-
based Nationalist authorities. In early 1950, two Nationalist army divisions
totaling 30,000 under Hu Zongnan still held a small section of territory in the
Sichuan-Xikang provincial border against 280,000 local PLA troops.
Meanwhile, a wide belt in southern Yunnan held by loyal Nationalist
irregulars also remained beyond Communist control. Shortly after Chiang
Kai-shek departed Chengdu, a Nationalist military field headquarters was set
up in Xichang, where Chiang ordered Hu to turn the area into an enduring
base for guerilla operations in Southwest China.70 To consolidate the defense
of Xichang, Chiang planned to use Mengzi in southern Yunnan, then still
under Nationalist control as a transfer post, where the first batch of 50,000
gallons of fuel and other materiel was scheduled be airlifted to Xichang from
Hainan Island. Meanwhile, Chiang also tried to use Claire Chennault’s Civil
Air Transport to transfer the abundant tin ore in the Mengzi area out of
Yunnan as revenue to subsidize Nationalist military activities on the
mainland.71 To demonstrate his resolution in safeguarding Xichang to the end,
Chiang sent his son Ching-kuo and other high-ranking military staff on a
dangerous inspection tour and to work out a feasible defense strategy, in
which a military zone bordering Sichuan, Xikang, and Yunnan might be
sustained.72
Maintaining a presence in mainland China’s remotest southwestern corner
was a daunting challenge, and this last-ditch effort eventually proved futile.
But miraculously, despite extreme difficulty in obtaining supplies and logistic
support from the outside world, the Xichang stronghold lasted for three
months. Despite the gallantry of their stance, the Nationalist remnants in
Xichang were on their last legs by the end of March 1950. When the
Communist-besieged Nationalist forces under Hu Zongnan were obliged to
abandon their field headquarters, Hu instructed his men to withdraw
southward into West Yunnan and to join the local anti-Communist force under
General Li Mi, a loyal KMT commander still struggling against the
Nationalist-turned-Communist Yunnan provincial authorities.73 A large
portion of Hu’s forces was wiped out halfway through the Xikang-Yunnan
border; only about 400 survivors managed to escape and retreat into the Shan
State in northern Burma, where they were later joined by Li Mi’s remaining
2,000 men from Yunnan.74 Li Mi’s irregulars in Burma, who constituted an
exiled but rather unmanageable Nationalist force, became a flashpoint in East
Asia’s Cold War theater in the years to come.
The other Nationalist army in exile unexpectedly found its way to
Vietnam. Between November and December 1949, Bai Chongxi’s forces
were largely defeated and destroyed in Guangdong and Guangxi provinces,
and only one army corps, totaling about 30,000 men under General Huang
Jie’s command, survived and retreated to the Guangxi-Vietnam border. These
Nationalists resisted fierce PLA attacks in the rear, while their
representatives negotiated with the French at Chi-Ma, a Vietnam border post.
An agreement reached on December 12 allowed the Nationalist forces to
enter Vietnam, where they soon surrendered their arms and equipment.
Shortly thereafter the disarmed soldiers moved from Chi-Ma to the shores of
the Bay of Along near Haiphong.75 In late January 1950, another 4,500
Nationalist troops under Li Mi in Yunnan fled the PLA and also moved into
Vietnam, where they too were interned right away.76
In Beijing, the newly inaugurated Chinese Communist regime realized the
possibility of the Nationalist entry into Indochina, and Mao Zedong was
furious. On November 29, Zhou Enlai issued a warning to the French
authorities in Vietnam, to the effect that any government offering refuge to the
Nationalist forces would face consequences.77 The French had every reason
to worry about the Chinese Communists’ threat. Their outposts at Chi-Ma and
other northern Vietnamese borders had a garrison force of only one or two
companies, while Zhou Enlai’s strong warning was supported by more than
50,000 PLA in Guangxi Province. Zhou’s warning greatly disturbed the
French. For a while, around mid-January 1950, they considered returning the
interned Nationalists to mainland China, a plan they never implemented.78 In
the summer of 1950, the Nationalists were transferred to Phu Quoc Island,
about 15 miles off the southern coast of the Indochina Peninsula, awaiting
eventual repatriation. The other 5,000 Nationalists from Yunnan were also
relocated in Cam Ranh Bay in South Vietnam. It was not until the summer of
1953 that these disarmed and ragged Nationalist soldiers were eventually
sent to Taiwan.79
The presence of these two exiled Nationalist military remnants in,
respectively, Burma and Vietnam, despite enduring miserable conditions, had
considerable political implications. For Chiang Kai-shek, as long as there
were still traces of a Nationalist military presence in Asia, there remained a
dim yet symbolic hope of reconquering the Chinese mainland. Shortly after
Huang Jie’s men settled themselves near Haiphong, Bai Chongxi proposed to
Chiang that his exiled soldiers in Vietnam be reorganized into a volunteer
force to collaborate with Bao Dai’s regime against communism. Huang’s
implication here was that this exiled Nationalist force might one day return to
Southwest China.80 In April 1950, General Li Mi, now appointed by Chiang
as governor of Yunnan, proposed that two operation bases be set up on the
Yunnan-Burma and Yunnan-Vietnam borders. Li urged that negotiations be
opened with the governments of Thailand and Vietnam over the establishment
of two liaison offices in Bangkok and Saigon to facilitate his anti-Communist
cause in Yunnan. While the Nationalist Foreign Ministry was reluctant to
follow suit when considering Taipei’s already strained international position,
it nevertheless suggested that an underground network be created under the
cover of Taipei’s existing diplomatic posts in Bangkok and Saigon.81 After
the outbreak of the Korean War, these two exiled Nationalist forces became
an issue between Taipei and Washington.
 In Taipei, working out what was the best way to deal with the Nationalist
authorities on Hainan Island had become a headache. In early March 1950,
Bai Chongxi appealed to Chiang Kai-shek for financial aid to support his
90,000 surviving forces in the mountain areas of his home province of
Guangxi, where they were carrying out small guerrilla operations against the
Communists. Although a reluctant Chiang verbally agreed to pay 100,000
silver dollars monthly to Bai’s remnant forces through the Hainan authorities,
he realized that a decision had to be made about cutting support for
Nationalist forces not under his direct command, a move that Taiwan’s
financial crisis made urgent.82
According to one U.S. confidential report, by early 1950 the total monthly
budget for Nationalist military expenses was 38,530,000 silver dollars, of
which the budget for the Southeast Military and Political Administration
command area (including Taiwan, Hainan, Zhoushan, and other islands along
China’s southeast coast) was 26,710,000 silver dollars. To sustain the
Southeast military and political command, 11,990,000 silver dollars would
be contributed by the central government, while the remaining 14,720,000
silver dollars (roughly 42 million New Taiwan Dollars) would be the
Taiwan provincial government’s responsibility. As the provincial
government’s revenues in 1949 fell short of its own civilian expenditures,
and as K. C. Wu could not now raise more than 10,640,000 silver dollars
monthly for military expenses, it was extremely difficult to see how the
provincial authorities could meet this monthly contribution without resorting
to inflationary measures.83 The account given by Ren Xianqun, K. C. Wu’s
capable provincial finance commissioner, indicated that around February
1950, the gold reserve that Chiang Kai-shek brought from Shanghai was
estimated at 850,000 ounces, and of which 200,000 ounces were expended
for military expenses monthly.84 By the end of March, Chiang was so worried
about the speedy depletion of Taiwan’s gold reserves that he ordered a
ceiling on monthly military expenditure be fixed at 23,000,000 silver dollars,
well below the 38,530,000 silver ceiling in place at the beginning of 1950.85
Given such dire financial conditions, it is unsurprising that, in early
March, the governor of Hainan, Chen Jitang, and the island’s military defense
commander, Xue Yue, decided to fly to Taipei to ask for further aid, but
Chiang dissuaded them from making the trip. Instead, Chiang sent his vice
minister of economics to Hainan to deal with the leaders on the island.86 In
the meantime, when Chen Jitang’s Nationalist 32nd Army stationed in Hainan
planned to evacuate to Taiwan due to increasing difficulties in obtaining food
and logistic support, Chiang categorically rejected the plan.87 By early April
1950, it became evident that Chiang cared less and less about whether
Hainan was lost or held, an observation that led Colonel David Barrett, U.S.
military attaché in Taipei, to posit that “any U.S. money spent in Hainan in
the near future would inevitably be lost, without even having purchased
time.”88 What Chiang urgently needed now was an acceptable schedule and
justification for giving up Hainan that would not further damage his
government’s already weak prestige. Eventually a decision was made with
the advice of Admiral Charles M. Cooke, who carried out a privatized U.S.
policy toward Chiang and thus influenced Nationalist China’s vital national
defense and security policy formulation in the darkest moments of Chiang and
his crumbling regime.
 7
U.S. Military and Security Policy Goes
Underground

IN JANUARY 1950, when Harry Truman and Dean Acheson publicly announced
that Washington would not provide military assistance to safeguard Taiwan,
few in the world doubted that Chiang Kai-shek’s political career was
doomed and that Mao Zedong’s forces would invade Taiwan and the island
would perforce become part of the new People’s Republic of China. But in
the meantime, in the United States, a group of politicians, businessmen, and
serving and retired military officers, all staunchly pro-Chiang, had been busy
exploring possible means to prevent Taiwan from falling to the Communists.
Given Washington’s official stance of nonintervention in the unsettled
Chinese civil war, efforts made by Chiang’s American supporters
inadvertently led to a somewhat privatized policy toward the Nationalist
government, unprecedented in China’s as well as in America’s recent history.
A growing trend toward privatizing American policy toward Nationalist
China became more discernable when, on November 7, 1949, William
Pawley, the recently retired U.S. ambassador to Brazil and a core member of
the China lobby, wrote to Dean Acheson suggesting that “a small group” of
retired officers should be dispatched without delay to Taiwan as Chiang’s
military advisors. Pawley specified in his letter that the total number in this
group of advisors, including additional civilian economic ones, should be
130 to 150, and he asked for the “approval or acquiescence” of the Truman
administration.1 Instead of refusing outright, the secretary of state replied that
he did not object to a “limited number” of private American citizens going to
Taiwan, if their services were contracted directly by the Nationalist
government and if the United States took no part therein.2 Although Acheson
gave Pawley the “acquiescence” he requested, nothing substantial followed.
Around the time that General Zheng Jiemin visited the United States, there
was a brief discussion about sending a military assistance group to Taipei.
This idea was soon aborted because of the State Department’s reservations.3
After the Nationalist government moved to Taiwan in December 1949, the
island’s military security remained a crucial topic for political and military
chiefs in Washington, who kept a wary eye on both the seemingly inevitable
collapse of the ragged regime and an expected increase of the Communists’
military strength when they captured the Nationalist weaponry on the island.
This is fully understandable. A top-secret State Department memorandum
prepared in early 1950 provides a rare glimpse of Taiwan’s ammunition
landscape at the critical juncture of its survival. In the fourteen months
between November 1948 and early January 1950, the most significant items
shipped to Taiwan from the United States included 137,200 rifles, 7,060
machine guns, 200 motor carriages, 20 AT-6 aircraft, 77,189,000 rounds of
shells and ammunition, 70,000 rounds of rockets, and 17,900 bombs of
various categories. This confidential investigative report went on to suggest
that the Nationalist government was able to procure 30 Sherman tanks from
Britain, 1,000 tons of small arms munitions from Spain, 81,000,000 rounds
of ammunition from Canada, and 25,000,000 rounds of ammunition, 41,000
rifles, and 600 machine guns from Belgium.4 Meanwhile, there were 100
each of scout cars, armored cars, and light tanks waiting to be shipped to
Taiwan from Philadelphia; they ultimately reached the island in late March
1950.5
While many in Washington were convinced that the Nationalists had
enough to defend their island base, others, specifically those at the SCAP
headquarters in Tokyo, believed more should be done to rescue Chiang Kai-
shek. In late January 1950, apparently with the tacit approval of General
MacArthur, whose changed perception of Chiang is discussed later, two
high-ranking SCAP intelligence officers surreptitiously arrived in Taipei.
There they met Chiang Kai-shek, K. C. Wu, and other Nationalist high
officials. According to the SCAP headquarters, the purpose of their visit was
to “inspect future sites for radar stations” to be established in Taiwan.6
Chiang seized the opportunity and urged Tokyo to assist Taiwan with the
island’s weak air defense. In addition to enhancing Taiwan’s air defense and
the possible installation of radar stations, Chiang also discussed with the two
SCAP intelligence officers the practicality of establishing secret bases of
operations in South Korea.7
Despite the professed technical nature of the meeting, the presence of the
two military officers in Taipei immediately aroused serious concerns among
State Department bureaucrats, who worried that the “inspection tour”
contravened decisions enunciated by Truman and Acheson. Robert Strong
bitterly complained to Dean Acheson that the SCAP officers failed to inform
him of their arrival and the purpose of their visit, and they failed to keep their
appointment to see him in the embassy. They made all the appointments with
Nationalist ranking officials, including Chiang Kai-shek, on their own, which
fostered the impression of division among U.S. government agencies. More
seriously, they had created in Nationalist Chinese minds “erroneous ideas of
what to expect” from the Americans.8 The State Department also worried that
the Nationalists in Taiwan would ask the two officers for advice on the
maintenance and operation of these radar stations, and the press would
interpret the visit as further evidence of American assistance.9 In September
1950, when Major Henry Vanderpuyl, one of the two SCAP military officers
who flew to Taiwan, was found engaging in a security breach by disclosing
the substance of a classified U.S. Embassy telegram to Chiang Kai-shek’s
military representative in Tokyo, the State Department took that as a chance
to fight back.10 In the spring of 1951, at the request of Assistant Secretary of
State Dean Rusk, the Defense Department ordered the removal of Major
Vanderpuyl from all contact with intelligence work involving Chinese affairs
and transferred him to a “technical bombing group assignment,” where he no
longer dealt with Taiwanese matters.11
 CHARLES COOKE’S HOUR IN TAIWAN

Despite the State Department’s grave concerns that Taiwan’s fall to the
Communists was inescapable, MacArthur and other staunch KMT supporters
in the U.S. military establishment were determined to act on their own. On
February 11, about ten days after the two SCAP intelligence officers’ visit to
Taipei, Charles M. Cooke, former commander of U.S. naval forces in the Far
East who was now accredited as a correspondent for the International News
Service, followed suit. Accompanying Cooke was Millard P. Goodfellow,
former deputy director of the Office of Strategic Services, who had served in
Korea shortly after World War II and maintained close relations with the
Korean government, SCAP, and military authorities on Okinawa. As newly
released Chinese documents reveal, their trip to Taipei was apparently
arranged by SCAP headquarters with MacArthur’s approval.12 Meanwhile,
the State Department and the U.S. Embassy in Taipei were kept in the dark.
They were told that the purpose of Cooke and Goodfellow’s visit to Taiwan
was to conduct private business, including “selling fertilizer”; Cooke and
Goodfellow’s actual activities in Taipei were never made known either to
the State Department in Washington or to American diplomats in Taipei.13
In Taiwan, Charles Cooke surely had business other than selling fertilizer.
Chiang Kai-shek and Cooke were old acquaintances. In early 1946, when
Cooke took command of the Seventh Fleet, he maintained very close working
relationships with top Nationalist leaders such as Chiang and his spymaster
Dai Li. Cooke was also a keen advocate of establishing an American naval
advisory group in China to counteract Soviet influence in postwar East
Asia.14 Toward the last months of 1948, when the Nationalists looked like
they were losing the civil war, Cooke remained keen to maintain a U.S. naval
presence on the Chinese mainland, urging that American military assistance
be given to Chiang’s regime at all costs. His strong pro-KMT tendencies got
him into trouble with other U.S. military chiefs like George Marshall.15
 Cooke won Chiang Kai-shek’s confidence soon after arriving in Taiwan in
February 1950. This is understandable, because during that time Chiang
found it almost impossible to trust any of his own military and political
subordinates. Shortly after Chiang resumed the presidency in Taipei, Cooke
was invited to attend regular, top-level military conferences in the
president’s office.16 Apparently, Chiang hoped anew for military aid from the
United States or elsewhere through back channels associated with Cooke’s
personal network.

7.1 Charles M. Cooke (second from left) meets with a group of Nationalist Chinese military officials,
ca. 1950. (Courtesy Jane Engert, Charles M. Cooke Papers, Hoover Institution Archives)

Charles Cooke’s first priority was to revive the plan of dispatching a U.S.
military advisory group to Taiwan, whether in an official or unofficial
capacity. Cooke’s ally William Pawley had tried but failed to secure final
approval from Washington for this much-discussed plan, but now the retired
admiral wanted to revive it. In March 1950, Cooke worked out a draft
contract, in which he proposed the formation of a “Special Technician
Program” (STP) nominally under the supervision of the New York-based
Commerce International China, Inc. (CIC), a subsidiary of the World
Commerce Corporation chaired by S. G. Fassoulis, another powerful figure
in the China lobby.17 The World Commerce Corporation was an enigma. It
was a commercial firm backed by leading American capitalists like Nelson
Rockefeller, but was also covertly supported by former intelligence chiefs
like William Donovan, founder of the Office of Strategic Services. The CIC’s
complex pedigree thus imbued the STP with political intrigue from its
inception.18 As Cooke admitted later in a congressional hearing in October
1951, he never received any governmental authorization for the STP, nor for
any of the several related underground activities undertaken through these
ostensibly commercial firms.19
Chiang Kai-shek embraced Charles Cooke’s proposal without hesitation.
It should be mentioned, however, that during the first months of 1950, Cooke
was not the sole figure seeking to render “technical assistance” to the
“abandoned” Nationalists in Taiwan. In a top-secret memorandum to Cooke,
Chiang revealed that, since late 1949, around 5,000 Americans had applied
at the Nationalist Chinese Embassy in Washington and other Chinese
government agencies to volunteer their services in fighting the Chinese
Communists. Noticeably, a retired colonel named Irving Short, who claimed
to have strong connections with core members of the China lobby like Alfred
Kohlberg and Senator William Knowland, was particularly eager to form a
volunteer group to assist Chiang’s anti-Communist cause. Short informed
Taipei that a survey group of up to five veteran U.S. naval and military
officers would soon visit Taiwan. Once a satisfactory survey was concluded,
an American volunteer group would be established. Funded by American
contributors, it would provide the Nationalists with moral support and
military and technical advice.20
 Before visiting Taipei, Irving Short met with S. G. Fassoulis in New York
and was introduced to a group of Chiang Kai-shek’s staunch supporters.
According to Short, his proposal of organizing a volunteer group was met
with favor not only among Chiang’s American supporters, but also among
prominent military figures such as General Hoyt Vandenberg. In New York,
Fassoulis invited Short to join the CIC’s secret activities in Taiwan. But back
in Taiwan, Charles Cooke apparently saw Short as a potential competitor to
his own newly launched cause. During his stay in Taipei in early April 1950,
Short was treated coldly by Cooke and his associates, who not only bad-
mouthed him, but also refused to cover his travel expenses (as promised by
Fassoulis). After Short returned to the United States, he retaliated by
revealing the CIC’s secret business in Taiwan to the State Department, but it
stirred no response from Washington’s diplomatic bureaucrats.21
On behalf of Chiang Kai-shek and the Nationalist government, General
Jiang Biao and the Board of Supplies of the Executive Yuan under him
served as the key liaisons for Cooke’s highly sensitive program. On April 4,
1950, Jiang and Cooke reached a consensus on the STP: Thirty-one
American “special technicians,” including one “coordinator,” would be
recruited to serve in Taiwan. The annual budget for the special technicians
was set at $396,000. Meanwhile, Cooke was authorized to use the money that
the Nationalist government had deposited in an unidentified “joint account
revolving fund” in Los Angeles to defray all the STP’s expenses.22 A week
later, the Board of Supplies and the CIC signed a further agreement in Taipei,
which would be renewed every six months.
The STP’s inception marked the start of a new phase of Nationalist
military reconfiguration on Taiwan. On Chiang Kai-shek’s instructions, new
“offices of technical advisors” were duly established in the Nationalist army,
navy, and air force headquarters. These technicians, who started arriving in
Taiwan in mid-March, began to advise, if not supervise, the demoralized
Nationalist troops’ training, reforming, and other related activities on the
island. Their responsibilities also included evaluating the capabilities of
higher-ranking Nationalist military officers, and reporting these to Chiang.23
As the coordinator of the STP, and now fully entrusted by Chiang, Cooke
became so powerful and influential a figure that, before long, many leading
Nationalist military chiefs began to take a hostile attitude toward him.
With the STP on the way, Charles Cooke seemed momentarily to have
demonstrated his ability to improve the Nationalists’ military and security
position. On the same day that the STP contract was signed in Taipei, Cooke,
in his dual capacity as a retired admiral and a U.S. news correspondent in
Taiwan, wrote to Senator William Knowland asking that a substantial portion
of the U.S. military surplus allocated to the Philippines be transferred to
Taiwan. He argued that the Nationalists were in urgent need of at least 300
planes to secure their air superiority in the Taiwan Strait and defend the
islands still under their control. Cooke claimed that providing these planes
would go a long way toward saving America’s deteriorating position in the
Far East.24
As a matter of fact, in March 1950, before the China lobby could assist in
helping to transfer the aforementioned military surplus to Taiwan, Cooke and
the CIC had surreptitiously purchased a considerable amount of munitions
from the Philippines on behalf of the Nationalists. The items purchased
included aircraft spare parts valued at $8 million, 300 cases of radar
equipment, and 100 tracked landing vehicles (LVT). At Cooke’s request, a
large portion of the ammunition was assigned to supplement General Sun
Liren’s divisions.25 Rumor also had it that CIC agents in Manila were
meanwhile purchasing an additional 426 surplus tanks to be shipped to
Taiwan.26 The Nationalists’ acquisition of such a huge number of surplus
tanks disturbed politicians at both the State Department and the British
Foreign Office, who worried that these heavy weapons could fall into the
hands of the Chinese Communists should Taiwan be captured, thus posing a
threat to the West. In the end, the alleged 426 surplus tanks never made it to
Taiwan.27
In the meantime, Cooke also managed to purchase at least 70,400 barrels
of gasoline on behalf of the Nationalist government from agents in San
Francisco and elsewhere in the United States. The lack of sufficient gasoline
had gravely threatened Nationalist military defense operations. However, the
gasoline deal alarmed Washington considerably. In an internally circulated
memorandum, Defense Department officials expressed concern that “third
parties” were ordering gasoline for the Chinese Nationalists. Although no
actions were taken to stop the deal, the defense chiefs argued that the U.S.
security interest “lies in making sure it [gasoline] reaches its proper
destination.”28
In early April 1950, Cooke helped Taiwan obtain 23,000 rounds of shells
from Yokosuka, a U.S. naval base in Japan, at a time when the Nationalists
desperately needed ammunition to defend their precarious offshore bases.
Cooke exercised his influence in Washington and Tokyo to acquire this timely
batch of surplus ammunition at a preferential price.29 Later on, he continued
his venture for the Nationalists and the CIC. In late April 1950, Cooke wrote
to senior officials in Washington’s military establishment, including Chief of
Naval Operations Admiral Forrest Sherman, urging them to transfer twenty-
seven frigate boats and landing ship tanks (LST) at Yokosuka, all of which
were considered postwar surplus, to the Nationalist government under a
provision of the 1947 Public Law 512, which authorized the transfer of
vessels to the Chinese Navy not to exceed 271 in number.30 At one point,
before the Korean War was declared, the STP in Taiwan went to such an
extent that anything relating to possible aid to the Nationalist regime would
automatically be associated with Cooke. One such incredible example took
place in May 1950, when rumors were circulating that, with Cooke’s
assistance, an international air brigade consisting of volunteers from the
United States and Israel would soon be formed in Taiwan.31
7.2Charles M. Cooke (right) with General Sun Liren (middle) at a military base in southern Taiwan, ca.
1950. (Courtesy Jane Engert, Charles M. Cooke Papers, Hoover Institution Archives)

The idea of an international air brigade could well have been floated by
Cooke, despite the fact that his expertise and priority was the navy, not the
air force. In mid-June, an energetic Cooke flew to Japan to try to persuade
the SCAP authorities to release to the Nationalist government at least a dozen
of these twenty-seven vessels and to equip them with ammunition. This time
Cooke was rebuffed; although naval officials like Forrest Sherman shared
Cooke’s view, public opinion around the world went against SCAP releasing
these ships to the Nationalists, who had within the preceding fortnight lost the
Zhoushan Islands off Zhejiang Province, and Hainan Island at the south end of
China.32
Chiang Kai-shek’s deep reliance on Cooke even allowed the retired
admiral to change the Nationalists’ secret ammunition procurement program
in the United States. In early June 1950, Chiang’s military mission in
Washington was trying to spend the $1.8 million remaining in the Chinese
Military Aid Fund on 160,000 rounds of antiaircraft ammunition and one
million rounds of 0.45 caliber ammunition. On hearing this, Cooke and his
STP staff immediately advised Chiang to instruct his mission to purchase
.30- and .50-caliber ammunition instead, as well as 3-inch ammunition for
the Navy, which Cooke believed was more urgently required for Taiwan’s
military defense.33 Chiang agreed, but his military staff in Washington
initially refused to cooperate with the CIC. Before long, it transpired that the
Nationalist military mission in Washington was incapable of procuring any
munitions whatsoever without the help of the CIC.34
 PRIVATE INFLUENCE ON NATIONALIST STATE POLICY

One of Charles Cooke’s defining roles on Taiwan was privatizing the

Nationalist government’s military and security policies in a critical period
surrounding the Korean War. On April 27, 1950, Chiang Kai-shek brought
Cooke with him to conduct a risk-loaded inspection tour on the Zhoushan
Islands. Chiang and most of his senior military advisors had long held that
Zhoushan was strategically vital to the defense of Taiwan. A Nationalist
military presence on the islands not only posed a threat to the Communists
around Shanghai, but might also deter the PLA from moving southward by
sea. Since the spring of 1949, Chiang’s loyal officers had spent money and
energy fortifying Zhoushan. A new airfield had recently been built, and
infrastructure such as radio masts were being completed.35 To demonstrate
the Nationalist determination to hold Zhoushan, a huge number of troops
were being deployed on the islands; by April 1950, about 130,000 troops
were stationed on the 502-square-kilometer islands, and further
reinforcements were being considered.36
7.3 Dinghai, the administrative center of Zhoushan, before the Nationalists withdrew from the islands,
ca. April 1950. (Courtesy Jane Engert, Charles M. Cooke Papers, Hoover Institution Archives)

After inspecting Zhoushan, Cooke made a bold suggestion: Withdraw the

Nationalist troops and abandon the islands altogether. His rationale was
straightforward: The latest intelligence report indicated that the Communists’
airfields in the Shanghai-Hangzhou military region had been fitted with radar
and modern antiaircraft batteries; Soviet jet planes flown by Soviet pilots
were operating there. The Nationalists had only two airfields on the
Zhoushan Islands, with inadequate radar equipment and no antiaircraft
batteries.37 To Cooke, the Communist sea and air superiority in the Zhoushan
area was very evident. Consequently, the islands could no longer function as
a base for Nationalist air operations, leaving no reason for the Nationalists to
retain the islands. Cooke further warned that despite the adverse affect on the
Nationalists’ morale, they should withdraw immediately and not later than
June 1, 1950, by which time good weather would allow the PLA to mobilize
their air power.38 In the meantime, rumor had it that Cooke not only
recommended the Nationalists withdraw from Zhoushan, but he also pledged
that the U.S. Seventh Fleet would patrol the Taiwan Strait thereafter.39
 Predictably, Chiang’s military advisors unanimously opposed the
abandonment of Zhoushan. They argued that the loss of the islands would
damage Taiwan’s defense capability in the north, and strike a decisive blow
to Nationalist morale and prestige.40 Chiang’s military chiefs were so
outraged by Cooke’s proposal that they frequently lost their tempers, turning
bitterly hostile against Cooke when he was present in military meetings. They
also privately directed their fury at Chiang, criticizing him for being taken in
by a foreigner, and accusing him of cowardice for wanting to withdraw from
the vicinity of the Yangtze Delta without any shots being fired.41 Despite such
vehement opposition from his military staff, Chiang decided to take Cooke’s
advice, and, on the morning of May 10, he ordered the retreat of the
Nationalist forces. On Cooke’s suggestion, Chiang assigned a reluctant
Admiral Gui Yongqing, then commander in chief of the Nationalist Navy, to
make the journey to Zhoushan, which was considered exceptionally
dangerous, and to coordinate the evacuation on site, lest turmoil and disorder
ensue. On May 16, 150,000 Nationalist troops and civilians, along with a
large quantity of munitions and materiel, safely reached Keelung without
encountering Communist forces.42
Charles Cooke played a somewhat different but equally crucial role in the
Nationalist final retreat from the Hainan Island. In early March 1950, without
much resistance, the Hainan Nationalists withdrew their naval forces from a
small yet strategic isle west of the Leizhou Peninsula in the Tonkin Gulf
called Weizhou Island. The abandonment did not invite much attention. Given
Weizhou’s useful location for monitoring the Communists in southern
Guangdong, however, the loss of this isle was not a good omen for Hainan’s
defense.43 In mid-April 1950, shortly after the Communists’ rudimentary
success in landing on northern Hainan, Governor Chen Jitang hastily flew to
Taipei to discuss the island’s last defense with Chiang. Chiang made it plain
that he would not use extra resources to strengthen the Hainan forces.44
Taipei’s decision deeply irritated the Hainan Nationalists. On April 25, three
days after the Communists captured Haikou, an Associated Press news
release quoted local authorities as saying that Chiang Kai-shek had no
intention to defend Hainan for fear that local military leaders would grow
stronger and turn their backs on him.45 The news greatly enraged Chiang,
who fretted that such messages could only further damage the Nationalist
government’s public image.46
In the midst of tension between the two Nationalist authorities on their
respective island realms, Chiang sent Cooke to Hainan to verify the situation.
Cooke reached Haikou on April 20, only to witness the fall of this important
stronghold. According to his subsequent confidential report to General
MacArthur, the Nationalist troops on Hainan under General Xue Yue were
“thrown in piecemeal and defeated in piecemeal.” When Cooke arrived in
Haikou, Xue first informed him that about 4,000 Communists had surrendered
to him at the beachhead, but he had decided not to annihilate them. Yet Cooke
had reason to believe that the Communists were actually waiting for
reinforcements and supplies; unwittingly, Xue had granted them this respite.
General Xue refused to believe this, but Cooke proved to be right: When
fighting resumed later that evening, the Nationalists were roundly defeated.47
The loss of Haikou triggered the eventual abandonment of Hainan.
Immediately after returning to Taipei, on April 23 Cooke prepared a
memorandum for Chiang Kai-shek. Based on his personal experience on the
island, Cooke argued that the Communists had established strong batteries on
the southern tip of Leizhou Peninsula well before the invasion of Hainan.
These batteries appeared to be radar-controlled, manned by expert gunners,
and fitted with influence (proximity) fuses, a U.S. Navy development not
available to any other country until the end of World War II. Cooke posited
that the Soviets were manufacturing these fuses and supplying them to the
Chinese Communists for use in antiaircraft batteries. He concluded that, as
the Communists now occupied the northern coast of Hainan Island, the
Nationalist naval forces could no longer control the Leizhou Strait, nor could
they keep the Communists from moving southward.48 Cooke’s memorandum
was the last straw: Chiang gave the order to evacuate Hainan. On May 2,
about 50,000 troops safely retreated with their ammunition and materiel to
Taiwan, now the Nationalist government’s sole territorial base.
 BRIDGING TAIPEI AND THE SCAP

The loss of Hainan and Zhoushan, albeit voluntarily, within a fortnight of one
another, posed a grave crisis of confidence to the Taipei-based Nationalist
authorities. The fall of the two island strongholds and the resultant further
shrinking of Nationalist territorial domain struck a blow not only to the
prestige of Chiang Kai-shek and his “Free China,” but also to the faith of
Chiang’s ardent supporters in the United States.49 William Knowland and
Walter Judd, Chiang’s most powerful allies in Congress, informed Cooke that
the fall of these offshore outposts had made it difficult to solicit support for
Taiwan.50 When Knowland learned that, contrary to widespread news
reports, the Nationalists actually had limited loss of their troops and materiel
during the evacuation operations, he informed Cooke that even a photograph
showing Nationalist troops disembarking in Keelung would facilitate his
lobbying efforts in Congress.51
The loss of Zhoushan and Hainan in the spring of 1950 also deepened the
belief of American diplomatic representatives in Taipei that Chiang Kai-shek
would never survive. They meanwhile predicted that the seat of the
Nationalist government might soon be forced to go into exile, perhaps to
Manila or to Seoul.52 On May 22, the Consulate General issued a public
letter to the American citizens in Taiwan, stating that the recent military
developments along the China coast made it appear possible that hostilities
might spread to points hitherto peaceful, with the result that normal
transportation facilities in Taiwan might be disrupted. The Consulate General
therefore urged American citizens without a compelling reason to stay to
consider leaving Taiwan while normal transportation facilities remained
available.53 Privately, military attachés in the embassy estimated that the
invasion of the island would occur sometime between June 15 and the end of
July, and accordingly advised Washington to cut official personnel on the
island to a minimum by mid-June, leaving only two military officers for
evacuation at last moment.54 The proliferation of rumors that Washington
would soon shut its consular post in Taipei caused panic among almost every
Nationalist high-ranking official on the island. On returning to the United
States from a recent trip to Taiwan, General Claire Chennault, in a personal
letter to William Knowland, told the senator that it was “most unfortunate” to
witness a desperate situation with the steady decline of both Nationalist
morale and courage.55
In these darkest moments of the Nationalist rule in Taiwan, Chiang Kai-
shek depended on very few but Charles Cooke. To dispel prevailing rumors
that the Nationalists had surrendered Hainan and Zhoushan to the Communists
without the slightest struggle, Cooke wrote to top figures in Washington,
including Defense Secretary Louis Johnson, to clarify and to solicit their
support for Taiwan.56 Despite witnessing the Nationalists’ poor military
performance at Hainan, Cooke defended Chiang’s position by arguing that the
loss of the island actually assisted the defense of Taiwan, as a heavy
economic and military load on Taiwan was now substantially lifted.57 He
also justified the withdrawal from Hainan as Chiang’s “deliberate strategy”
to draw worldwide attention on the deepening crisis in the Far East as well
as the rapid spread of communism in this region.58
Cooke was even ready to fight with his fellow Americans in Taipei. To
clarify rumors regarding the American position on Taiwan, on May 19, 1950,
Cooke arranged an informal meeting with the chief U.S. military attachés in
Taipei, including Major James Gault, Colonel David Barrett, and Colonel
John Gabbert. Based on his personal experience in Hainan and Zhoushan,
Cooke rejected the military attachés’ claim that the evacuations had
disastrously left thousands of Nationalist troops and precious matériel to the
Communists. Cooke also questioned the biased and unfair reporting on the
fate of Taiwan. He embarrassed the attachés by revealing that an informant
had told him an “unofficial poll” among American consular personnel and
military attachés had recently given July 15 as the expected date of Taiwan’s
fall, which these officers admitted to be true. Cooke bitterly tongue-lashed
the way in which such guesswork had become the basis for an official report
submitted to Washington and thereby the formal justification for evacuating
American citizens from Taiwan. In order to clear the air with U.S. policy
planners, Cooke sent a quick memorandum about his informal meeting to
Nationalist supporters in Washington and Tokyo, including General
MacArthur and Walter Judd.59 Cooke’s “enthusiasms” in turn invited sarcasm
from embassy personnel, who looked on with cold indifference. On May 26,
1950, Robert Strong wrote to his superior at Foggy Bottom, saying “Cooke is
now more or less openly heading up planning for all Chinese forces, but
whether he can achieve the necessary in a short time seems doubtful.” Strong
went on by questioning whether Cooke had the power to “boost morale,
prevent subversion, straighten out the command structure, improve
coordination and communication, prevent economic deterioration etc.”60
But Cooke simply refused to pause. While the whole world was
speculating that Taiwan’s collapse was imminent, following that of Hainan
and Zhoushan, Chiang Kai-shek entrusted Cooke to be a reliable bridge
between his near-bankrupt regime and General MacArthur’s SCAP
headquarters. Currently available archival materials suggest that, before the
outbreak of the Korean War, Cooke flew to Tokyo to meet with MacArthur as
Chiang’s personal messenger on April 10, May 24, and June 16. These visits
greatly strengthened the link between Taipei and the SCAP, and were critical
to the survival of Chiang’s regime in Taiwan.
Before his first visit to Tokyo in April 1950, Cooke drafted a personal
letter to MacArthur on behalf of Chiang Kai-shek, in which he broached three
key points relating to Taiwan’s security issues. First, the letter sought
MacArthur’s opinion on whether, if the Nationalists’ air and naval power
remained sufficiently superior, they should mount large-scale raids against
the Communist mainland in support of Nationalist guerrillas. This would
demonstrate the might of the Nationalist military in Taiwan. Second, if the
Nationalists were unable to mount large-scale raids by air and sea, how long
did the SCAP believe the Nationalist guerrilla activities on the mainland
could continue? Finally, given the resources available to them, how long
could the Nationalists sustain their military workload without a serious
breakdown? The implication here is that Cooke had advised Chiang to seek
the SCAP’s continued military support regardless of changes in Washington’s
Far Eastern policy.61 Cooke’s new role as Chiang’s messenger played a
positive role in reviving MacArthur’s support for the Nationalists. Instead of
discrediting Chiang and his regime, which MacArthur had done in the fall of
1949, the general now openly claimed that if Chiang “has horns and a tail, so
long as he is anti-Communist, we should help him.”62
In his second meeting with MacArthur, on May 24, 1950, Cooke gave a
firsthand description of the situation on Taiwan. He accused American
diplomatic personnel in Taipei of providing Washington with inaccurate
reports on the situation in Taiwan, and he tried his best to clear away the
misconceptions of the SCAP officials. Cooke also took this opportunity to
explain that abandoning Zhoushan and Hainan had actually been in the
interest of Taiwan, urging MacArthur and his staff to be firm about Chiang.63
Persuaded by Cooke’s personal experience on Taiwan and the two offshore
islands, MacArthur sent a memorandum to the Joint Chiefs of Staff on May
29, in which he emphasized that the problem of Taiwan had become urgent,
as Sino-Soviet cooperation in the Shanghai area had come to his attention,
and that Soviet jets had been sent to the Chinese Communists’ air force. If
Soviet forces could use Taiwan, the general argued, the Malay-Philippine-
Japan shipping lanes could be cut, leaving Japan isolated:
In the event of war between the United States and the USSR, Formosa’s value to the
Communists is the equivalent of an unsinkable aircraft carrier and submarine tender, ideally
located to accomplish Soviet strategy as well as to checkmate the offensive capabilities of the
central and southern positions of the Far East Command front line.64
 A COUP AGAINST CHIANG?

Cooke’s third trip to Tokyo took place at a very crucial moment, when the
likelihood of Chiang Kai-shek’s political survival in Taiwan was rapidly
diminishing. Contemporary rumor had it that, given a hopeless landscape,
Chiang was willing to relinquish his authority over Taiwan provided that the
United States did not abandon the island. According to Robert Accinelli,
around early June 1950, Chiang Kai-shek conveyed a personal message to
President Truman via Karl W. V. Nix, an Ohio businessman and family
acquaintance who had recently held a private interview with the Nationalist
leader. In the message Chiang acknowledged his “past mistakes” and stated
that if the president would send someone to Taiwan who would not dishonor
him, he would do anything Truman asked of him, including abdication.65 A
piece of the State Department record also suggests that, on June 26, 1950,
Truman disclosed to his subordinates that he had had a private letter from
Chiang about a month before, “to the effect that the Gimo might step out of the
situation if that would help.” The president further thought that Chiang “might
step out if MacArthur were put in.”66 Chiang’s personal diary indicates that
his meeting with Nix actually took place on May 24, not in early June.
Chiang, however, gave no further details about their conversation, nor
anything more about his stepping down.67
Chiang’s personal message to Truman, if it existed, was by no means
coincident. On March 3, 1950, a highly sensitive course of action about
China and Taiwan was discussed in Dean Acheson’s office. In this meeting,
top brass in the State Department contemplated the following points:
1) The United States should not recognize the government on
Taiwan as the ultimate solution;
2) The United States should no longer recognize the government on
Taiwan as the government of China but would maintain de facto
relations with the provincial government of Taiwan;
 3) The United States had viewed Taiwan as part of China.
However, if steps should be taken spontaneously to establish an
independent regime of Taiwan separate from China, the United
States would have to determine its attitude in the light of
developments as they occurred; and
4) The United States would view with disfavor and would have to
reconsider its attitude if an assault were made on Taiwan.
The conference attendees admitted that the proposed course of action was
directed toward encouraging the formation of a “more satisfactory regime”
on Taiwan, and the creation of a Taiwan independent of China. But
Acheson’s top aides were uncertain whether any of this was feasible, as the
points raised “would probably set off a train of events [on the island] while
exercising no control over the end results.” For example, they found it hard to
imagine that, while Washington maintained de facto relations with the Taiwan
provincial government, that government actually did not control the military
force on the island, whereas Governor K. C. Wu had little influence in
military affairs. Further, if Washington continued to supply arms to the regime
on Taiwan after the withdrawal of recognition of it as the government of
China, the United States would be subjected to widespread attacks in the
United Nations and other international bodies. In the meantime, top State
Department chiefs predicted that any active steps taken by Washington to
influence regime changes would commit the United States to supporting the
new regime on Taiwan. Thus, no conclusion was reached after the meeting.68
Nothing happened until April 27, when Paul Nitze, who directed the State
Department’s policy planning, told Dean Acheson that he and John Foster
Dulles, Acheson’s new consultant on foreign affairs, had some “very
interesting ideas on Formosa,” adding that he and Dean Rusk would “look
further into the matter.”69 The outcome of this investigation was a bold
“hypothetical” plan, brought forth by Nitze on May 3, to remove Chiang. As
Nitze saw it, a successful coup could be launched by the much-favored Sun
Liren, who in a secret message to Dean Rusk had “confided” that he was
ready to “assume full military control” by proposing to depose Chiang and
that he would also eliminate from power “all prominent members of the
KMT” on the island. The United States could then throw its weight behind
Sun and organize an effective defense of the island, while fomenting
resistance on the Chinese mainland.70
Doubtlessly, something unusual was brewing. Three weeks later, on May
30, Rusk, Nitze, Philip C. Jessup, Livingston Merchant, and Philip Sprouse
met to discuss Nitze’s draft plan and to explore “various possibilities in the
Formosan move.” The attendees predicted that the Russians might well
welcome a partial commitment of U.S. forces to the protection of Taiwan
after Chiang Kai-shek was removed, as this would give Moscow an
opportunity to push the Chinese Communists into a clash with the United
States, aided probably by direct if unidentifiable Soviet support such as with
submarines.71 The attendees also scrupulously formulated several possible
options and integrated them into an official memorandum, submitted by Rusk
to Acheson on June 9. The key points were that Chiang Kai-shek should be
approached, probably by John Foster Dulles, during his upcoming trip to
Japan around mid-June, with the following message: In its current state,
Formosa was bound to fall; the United States would do nothing to assist
Chiang in preventing this; and the only course by which Chiang could prevent
bloodshed was to request UN trusteeship.72
There is no evidence that Acheson ever responded to Rusk’s
memorandum. But a week later, on June 15, in another top-secret
memorandum, the State Department upper echelons further delineated
procedures to implement the aforementioned course of action. Putting it
concisely, Washington should inform General Sun Liren in the strictest
confidence through a private emissary that the U.S. government was prepared
to furnish him the necessary military aid and advice in the event that he
wished to stage a coup d’état and establish military control over Taiwan. Sun
should be given ample funds, which might run into several million dollars, to
assist him in buying over other Nationalist commanders necessary to such an
undertaking. Sun should also be given firm assurance of whatever additional
funds he might need in this connection during the early stages of his
governance. And Washington would be ready to arrange for the shipment
from Guam or other nearby U.S. military bases of arms and ammunition
necessary to meet Sun’s requirements during and/or immediately after the
coup.73
In the eyes of some strategists at Foggy Bottom, supporting Sun Liren to
replace Chiang Kai-shek also had significant implications for U.S.-
Communist Chinese relations. Were the United States to give Sun Liren
military advice and assistance to the point where he was in a position to
ensure a much more effective defense of Taiwan than would have been
possible under Chiang, Sun would become a more important figure in
relation to the scene on the Chinese mainland without the handicaps of
Chiang and other discredited KMT leaders. In view of the many reports of
dissatisfaction on the part of some of the PLA commanders and the
possibility of capitalizing on that dissatisfaction once Chiang was removed
from the scene, Washington felt it was possible Sun, from a strong position in
Taiwan, might be able to make some kind of deal with dissatisfied PLA
generals that might result in a break in the Chinese Communist camp. Were
such a result possible, the memorandum concluded, it would be infinitely
more to the United States’ advantage than the mere denial of Taiwan to the
Chinese Communists.74
Meanwhile, key mass media also lost no time advocating Taiwan’s
turnover to the United Nations. To rescue Taiwan from falling to the
Communists without the shedding of blood, a piece of commentary published
in the New York Times in the spring of 1950 argued that Chiang Kai-shek had
to “act as a world statesman” by handing Taiwan over to the UN
administration and leaving the island, not to act “as a Chinese military leader
bent on a last-ditch resistance.” “By fighting for it [Taiwan] with his inferior
force and losing it to the enemy,” the commentary roared, Chiang was
suicidally turning the island over to the Communists.75
In the weeks after the May 30 meeting, Dean Rusk met secretly with some
prestigious members of the Chinese community in the United States, including
Hu Shi, China’s ambassador to Washington during World War II, whom Rusk
hoped to enlist in the Sun Liren enterprise and take the lead of administrative
affairs after a new regime was formed in Taiwan.76 A coup to remove Chiang
seemed to be in the offing. Indeed, as Louis J. Fortier, a former assistant
director for special operations of the central intelligence, wrote tactfully in a
memorandum in June 26, before war had erupted in Korea, there were too
many Americans who gave Sun Liren the impression that he was America’s
only “White Hope for China.”77
It is hard to believe that Chiang Kai-shek was totally unaware of plans to
remove him. He was so disheartened that, at one point in early June, he
seemed to truly believe it was no longer possible for him to find a living
space in this world. In his personal diary around this time, Chiang, despite a
despairing situation, still hoped against hope to fight with the “dark forces”
for his very survival to the last.78 Charles Cooke’s visit to Tokyo in June
1950 was unquestionably related to the changing American stance toward
Chiang. Adopting the posture of apparent self-abnegation that he had taken
with President Truman, on June 15 Chiang passed the following message to
MacArthur and Charles Willoughby, the general’s deputy chief of staff for
intelligence, via Cooke: “The Generalissimo, aware of the danger of his
position, is agreeable to accept American high command in every category
and hopes to interest General MacArthur to accept this responsibility, …
soliciting his advice, guidance, and direction.” Chiang also invited
MacArthur to conduct an inspection tour of Taiwan, and to assume command
of the island’s military if the situation so warranted.79 Meanwhile, through
Cooke, Chiang also petitioned Dulles, Louis Johnson, and Chairman of the
Joint Chiefs of Staff General Omar Bradley, who were then in Tokyo, for
advisors, economic and military assistance, and a “positive declaration of
policy” toward Chiang and his leadership.80
Regardless of Chiang’s humble offer to surrender his authority, MacArthur
seemed determined to keep him in power for the time being so as to preserve
Taiwan’s strength as a useful base for possible military rollback in the future.
In a meeting with members of the Foreign Service in early June, MacArthur
argued that, rather than make things difficult, the State Department should
assist Chiang in his fight against the Communists, and “we can try to reform
him later.”81 As a result, in the eyes of the SCAP chief, a coup to remove
Chiang was virtually out of the question. In a forceful memorandum delivered
to Washington after meeting with Cooke, MacArthur advanced three major
reasons for a more assertive approach: strategically, that Taiwan was an
“integral part of the U.S. offshore island defense system”; morally, that the
people of Taiwan deserved an “opportunity to develop their own political
future”; and politically and psychologically, that Communist expansion must
be hemmed in.82 In response to Chiang’s invitation to visit Taiwan,
MacArthur concurred by suggesting to the Joint Chiefs of Staff an immediate
survey of Taiwan’s economy, polity, and military so as to prevent a
Communist takeover. In his conversation with John Foster Dulles and Louis
Johnson on June 22, MacArthur further made it clear that he should
personally conduct such a survey, to “accomplish the desired end in
Taiwan.”83 The SCAP chief thereby laid the foundation for his controversial
trip to Taiwan two months later.
Faced with an insecure and unstable environment, both external and
internal, KMT national security apparatus under Chiang Ching-kuo began
campaigns of terror to root out communist networks and sympathizers on the
island and to extend the reach of their surveillance and cells down to the
grass roots. These campaigns reflect a “not-so-accidental” aspect of the
accidental formation of the island state; they were intentional and relatively
successful in stabilizing Nationalist rule domestically and reestablishing
Chiang Kai-shek’s supremacy in the political hierarchy. Nevertheless, their
implementation, dubbed “white terror,” became controversial as the KMT
tried to rebuild its legitimacy among an island population that had every
reason to despise its ruling elites in the decades to come.84
 THE STP VERSUS THE EMBASSY

Given the unusual triangular relationship between Chiang Kai-shek, Charles

Cooke, and Douglas MacArthur in the months before the Korean War, it may
seem reasonable that Cooke would continue to play a crucial role in the
SCAP-KMT interaction after the war broke out in Korea on June 25, 1950.
Sensing that the tide had turned when President Truman ordered the Seventh
Fleet into the Taiwan Strait to prevent a Communist invasion, Cooke and his
STP staff on the island began to act more audaciously, even bypassing
American diplomats in their business dealings. Without consulting either
Washington or the American Embassy in Taipei, in late July 1950 Cooke
promised Chiang Kai-shek that more than 180 Nationalist military officers
and soldiers would be sent to each of the fifteen (unspecified) American
ships for training purposes. This project, Cooke believed, would signify an
important first step toward a comprehensive Taiwan-U.S. military
cooperation.85
During his two-day visit to Taiwan on July 31 and August 1, 1950,
MacArthur totally ignored U.S. diplomats in Taipei, who were neither
included nor made aware of the discussions being held there. Cooke and his
core STP advisors, on the other hand, were invited to join every top-level
conference between the Nationalist leaders and the SCAP chiefs. In a
confidential report to Dean Acheson in early August, Robert Strong
resentfully declared that Cooke and his men had undergone a “very definite
change of attitude” after the outbreak of the Korean War and had even
requested the use of the attaché’s communication system to maintain contact
with the SCAP headquarters and the Seventh Fleet. Following MacArthur’s
visit, as the report depicted, the sudden arrival of planes, people, and
equipment without advance clearance from the embassy seriously
undermined the position and usefulness of the attaché and liaison network
that the embassy had built up. Strong deemed this a great humiliation for him,
worrying that Cooke’s refusal to inform his military attachés of any policy
formulation could only “result in thorough emasculation” of the attaché
system.86
A previously unstudied aspect of the STP is its role in the creation of the
U.S. Military Assistance Advisory Group (MAAG) in Taiwan. In the months
following the outbreak of the Korean War, there was serious debate, if not a
power struggle, between the State and Defense departments over whether the
American military advisory aid to Taiwan should be rendered through the use
of an expanded attaché staff in Taiwan, or through a separate MAAG outside
the existing embassy structure. The State Department advocated placing
MAAG under the supervisory authority of the chief of the U.S. diplomatic
mission so that decision makers in Washington would have a thorough
comprehension of its aims. This, they insisted, was of vital importance to the
success of a positive China policy.87 As an alternative, they proposed that
military advice might also be channeled to the Nationalist government
through U.S. Army, Navy, and Air Force officers not on active duty, and
through other nonofficial personnel, acting in an ostensibly private capacity
while on the payroll of the Nationalist government.88 The military
establishment brushed aside such suggestions, arguing that a direct chain of
command in Taiwan through SCAP to the Joint Chiefs of Staff was necessary
and should be a priority. The State Department was quick to realize that, in
line with General MacArthur’s stance, the joint chiefs had already
considered and discarded the customary concept of a MAAG, in which the
ambassador would have major responsibilities, for a more complicated
arrangement that would give the SCAP virtually complete freedom of action
in the field.89
Significantly, both departments used Charles Cooke and the
implementation of the STP to strengthen their rationale. The State Department
argued that the STP, including numerous technicians and mechanics at
operational levels in various branches of the Nationalist Ministry of National
Defense, as well as several retired generals and flag officers of the U.S.
armed forces, was a perfect model for its proposed MAAG in Taiwan.90 The
military establishment argued conversely that the established connection
between the SCAP in Japan and the STP in Taiwan, which was operating
outside the U.S. embassy in Taipei, laid a solid foundation for military
liaison. With guidance from the SCAP and the Joint Chiefs of Staff, Charles
Cooke and his STP team would transform themselves from a private military
advisory body to a formal MAAG.91
Since Charles Cooke stood out as the most likely candidate to head up any
official U.S. MAAG in Taiwan, he and the CIC and STP affiliated with him
now inevitably came in for bitter criticism by his potential rivals. One
widely circulated denunciation was that Cooke’s men were greatly
concerned that U.S. military aid to Taiwan would cut the CIC out of its role
as Chiang Kai-shek’s main purchasing agent. The corresponding decrease in
income would necessitate reducing the payroll of Cooke’s STP advisers.92
Such criticism might be true, but apart from worrying about the future profit
of the STP and CIC, Cooke continued to have a very active role to play in
Nationalist’s policy-making following the outbreak of the Korean War. For
example, the issue of abandoning Quemoy off the Fujian provincial coast,
now physically the largest offshore island still under Nationalist control,
demonstrated Cooke’s strong influence in Chiang Kai-shek’s military and
security policy planning. As the war erupted in Korea, MacArthur
contemplated using Nationalist forces to assist the South Koreans. Chiang
first learned about this from Cooke, and viewed it as an opportunity to
cement a new U.S.-Nationalist Chinese military alliance. Taipei also
anticipated that the Korean conflict would develop into a third world war in
which the U.S. would eventually welcome all elements hostile to communism
to join its side. And, by participating in the imagined world war, the
Nationalists expected a full return of their international prestige and
visibility in the world politics.93
 Therefore, in early July 1950, Chiang Kai-shek was seriously considering
withdrawing Nationalist troops from Quemoy and other tiny coastal
possessions off Southeast China in order to bolster Taiwan’s defense,
thereby freeing 33,000 combat troops for the Korean theater. Another reason
to support this idea was Washington’s earlier announcement that the
Nationalist-held offshore islands would remain outside the Seventh Fleet’s
protection.94 Cooke thoroughly supported the Nationalist government’s
participation in the Korean War, but he vehemently opposed the evacuation of
Nationalist forces from Quemoy, as this move would not only look like
weakness to the Chinese Communists, but would produce a negative
psychological effect on Taiwan as well as the entire free world.95 Although
not wholly convinced, a usually peremptory Chiang once again followed
Cooke’s advice. This was a decisive moment; had the proposed withdrawal
from Quemoy ever come to pass, it would have removed the principal focal
point of the later Sino-American military crisis.
As the war in the Korean Peninsula heated up at the end of 1950 and into
1951, Cooke went on to increase his influence over Taiwan’s military and
political affairs frequently, without regard for American diplomats and
military attachés posted there. His STP advisors were all over the island,
engaging in critical inspections and supervising military training programs
aimed at restoring the Nationalist force to strong, combat-ready status.96
Cooke was equally zealous in helping Chiang Kai-shek launch effective
institutional reforms within the Nationalist military hierarchy. In a personal
memorandum to Chiang, Cooke criticized the division of command between
the two commanders in chief of the Nationalist ground forces and the
Ministry of National Defense. His advice was that authority and
responsibility for the administration and operation of the ground forces
should be vested in a single commander with complete authority within the
limits of his command. Cooke also suggested the creation of a commander
and command staff for planning, organizing, and moving an expeditionary
force as the first step toward reforming the whole army command structure.97
Using his naval expertise and background, Cooke gave further advice on a
possible institutional reorganization of the Nationalist Navy. Viewing the
confusion in Nationalist naval commands and operations, Cooke urged a
division of the functions performed by the navy headquarters and its chief of
staff. The former would be responsible for administration, whereas the latter
would conduct operations. The navy’s confusing planning staff, like that of
the army, gave Cooke cause for concern.98
Expecting that he would soon become the head of the official American
military mission to Taiwan, Cooke was even keener to recruit more of his
own men from all around the world than when the STP was first initiated.99
With equal enthusiasm, he proposed that more ammunition be procured via
the CIC on behalf of the Nationalist government. On September 14, 1950,
Cooke advised Chiang of Taiwan’s four “most urgently needed military
items” that the CIC could help to obtain: 93 LVTs, 25 P-51 fighter planes, 10
early-warning radars, and 117 jeeps.100 However, when compiling this list,
Cooke did not realize that the purchase of these items would cause an
insolvable headache, marking the beginning of the end of his enterprise in
Taiwan.
 THE END OF AN EXTRAORDINARY EPISODE

In April 1950, when Charles Cooke recommended the withdrawal of

Nationalist troops from Zhoushan, the absence of an adequate early-warning
radar system on the islands was one of his main reasons. Consequently, when
the Nationalist military authorities proposed in early July 1950 purchasing
new radar equipment through the CIC to strengthen Taiwan’s air defense,
Cooke was glad to offer his help. Chiang Kai-shek and his military personnel
relied solely on Cooke, as they understood well that only the CIC and its
contacts in Washington’s upper circle could obtain the required ammunition
export licenses from the Munitions Division of the State Department.101 In
mid-July, a CIC-related field radar engineer arrived in Taiwan and
conducted a topographical survey of the island. The survey report
recommended the purchase of 10 radar sets of LGR-1 or TPS-1 type to be
used as a basis for the future radar network around Taiwan. Cooke and the
CIC staff planned that, following the purchase of these ten early-warning
radar sets, nine radar technicians would join the STP program via the CIC
and establish a new training program for the Nationalist Chinese Air
Force.102
Chiang Kai-shek’s military men in Washington bitterly resented Chiang’s
decision to procure Taiwan’s urgently needed munitions through Charles
Cooke and the CIC, feeling that they had been bypassed and slighted, and
perhaps also because they may have been eager to profit personally from the
arms purchases. Around mid-September 1950, General Mao Bangchu, chief
of Nationalist China’s aviation procurement mission in Washington,
instructed his executive aide Colonel Xiang Weixuan to meet CIC personnel
in New York and express his concern about the radar procurement in
progress. Both Mao and Xiang were upset that Taipei circumvented the
mission in Washington and gave the CIC a green light to purchase the radar
systems on Taiwan’s behalf. Believing that Bendix, the radar export dealer,
was passing a commission to the CIC, Xiang warned that the CIC should halt
the radar procurement immediately and transfer the whole transaction to the
Chinese aviation mission in the United States.103
Instead of heeding Colonel Xiang’s threat, the CIC continued to procure
ammunition on behalf of the Nationalist government, particularly the radar
sets and the twenty-five P-51 fighter planes that had been added in
September 1950 to Cooke’s recommended list.104 Sensing that General Mao
and his aides might actually be interested in lining their own pockets, the CIC
hinted that the P-47 fighters, although not on Taipei’s priority list, were more
easily available and therefore requested a new power of attorney from
Taipei to cover the P-47 aircraft.105 This proposal was unacceptable to Mao
and Xiang, who decided to act against the CIC and secure their position as
the sole procurement agency of the Nationalist government. On January 3,
1951, Xiang went to the FBI and to the Air Force Office of Special
Investigations, accusing the CIC of illegally procuring ammunition on behalf
of the Nationalists in Taiwan. Xiang also accused several State Department
officials of having inappropriate relations with the CIC and unfairly helping
it obtain export licenses.106 The FBI and the U.S. Air Force initiated an
investigation into the CIC. Pending the conclusions of their investigations,
Taiwan received neither radar nor aircraft licenses, nor clearance for the
new STP radar technicians.107
On hearing Mao and Xiang’s allegations, Chiang Kai-shek was extremely
angered. At the suggestion of Cooke, Chiang recalled the two officers to
Taipei and planned to replace them with men who would collaborate with
the CIC. The Chinese Foreign Ministry also instructed its officials in
Washington to stop criticizing the CIC or even speculating about it, and
announced that a new committee would soon take charge of arms
procurement in the United States.108 Fearing for their political careers, Mao
and Xiang decided to open fire against their own government. They publicly
accused the Nationalist military establishment of corruption and
misappropriation of public funds. They also wrote to some of Chiang’s
supporters in Congress. Their strategy worked briefly. In March 1951,
Senator Walter Judd expressed his grave concern regarding the alleged
corruption to Chiang, stating that it would be very difficult for him to
continue his support for the Nationalists in Taiwan, unless the case was
concluded immediately.109 In the meantime, the mass media began to portray
this case as a return to the factional squabbling that was the Chinese
Nationalists’ gravest weakness.110
Taipei responded by suspending its two “incapable and disloyal” military
subordinates from all their official posts and instituting legal proceedings in
the United States for “inappropriate behaviors” that had seriously
undermined the prestige of the Nationalist government.111 However, the
damage to Charles Cooke, the CIC, and the STP was already done. General
MacArthur was dismissed in April 1951; thus the CIC lost its patron.
General William Chase was appointed the first chief of U.S. MAAG in
Taipei, which numbered the days of the STP. Two months later, Cooke
proposed to Chiang that it was time to terminate the STP, to which Chiang
agreed. In September, after transferring most of the advisory and training
activities to the MAAG recently instituted under General Chase, the STP was
abolished.112 This also ended a unique military and security relationship
between Nationalist China and the United States.
 8
The Island Redoubt Reinvigorated

WHILE CHARLES M. COOKE was actively playing a unique role in influencing

Nationalist China’s military and security policy formulation in the months
surrounding the outbreak of the Korean War, a comprehensive reevaluation of
U.S. policy toward Taiwan was being undertaken in Washington. In January
1950, when Harry Truman and Dean Acheson publicly announced their
apparent abandonment of the Nationalists in Taiwan and continued pursuing a
nonmilitary settlement of the Chinese civil war, their rationale largely
stemmed from the NSC 48 issued one month prior, the main theme of which
was to draw Mao Zedong’s Communist China away from Soviet Russia. The
Sino-Soviet treaty of February 1950, however, virtually eliminated prospects
for “Chinese Titoism” for the foreseeable future. The new alliance between
Moscow and Beijing accordingly prompted Washington to make a
fundamental policy reassessment.1 The result of this reevaluation was the
completion of NSC 68 in April 1950, a document that would greatly
influence Truman and the presidents who succeeded him, leading them into
an Asian morass they never learned how to escape. The document portrayed
communism as a coordinated global movement, thereby abandoning the
distinction between vital and peripheral interests that George Kennan’s
famous containment strategy had emphasized. Instead, the paper, prompted
chiefly by the success of a Soviet atomic bomb test in August 1949 and the
Soviets’ probable capability of producing hydrogen bombs, called for a
“tripling” of the U.S. defense budget for the purpose of frustrating what it
repeatedly characterized as “the Soviet designs” for the world.2
Washington’s new national security policy paper certainly generated a
strong impact on the reconfiguration of its policy toward East Asia, including
Taiwan. According to NSC 68, Europe was the center of Soviet aspiration,
with Moscow hoping to bring all of Europe under its domination. Yet, as the
paper warned, it was in Asia that Moscow had the greatest opportunities.3
Many in Washington started to believe that, since the conclusion of the Sino-
Soviet treaty, the exploitation of Beijing-Moscow tensions had now become
a long-term rather than immediate project. More significantly, by committing
Mao to a close alliance with Stalin, the 1950 treaty dissolved the key factor
working against American intervention in Taiwan.4 The new alliance
between Beijing and Moscow, as John W. Garver puts it accurately, also
strengthened the geopolitical significance of the island in countering the new
Sino-Soviet bloc.5 The 360-mile gap between Okinawa and Taiwan and the
100-mile gap between Taiwan and the Philippines would be very difficult to
seal if Soviet air forces operated out of Taiwan, providing an umbrella for
Soviet submarines heading for the open Pacific. With Taiwan under U.S.
control, Soviet submarines could be bottled up in the East China Sea. With
Taiwan in Communist China’s hands, the cork was out of the bottle. Even
American leaders who had previously advocated the sacrifice of Taiwan in
order to better encourage Chinese Titoism now agreed that maintaining the
integrity of the barrier chain of offshore islands was highly important to U.S.
security interests.6
With the NSC 68, the spirit of the defunct “trans-Pacific highway” idea
seemed to reappear, and Taiwan’s (not necessarily Chiang Kai-shek’s) geo-
strategic significance was confirmed in the designing of U.S. official policy.
What Washington needed now was perfect timing and justification to
interfere with the security of Taiwan, as well as a feasible way to solve the
problems surrounding Chiang Kai-shek and his group.7 Around May 1950,
when Paul Nitze advanced his “hypothetical plan” to remove Chiang and
place the island under U.S. or UN control, the plan was essentially in line
with NSC 68 and its new strategic thinking vis-à-vis Communist China.
MacArthur’s reluctance to oust Chiang had been critical in preventing Nitze’s
(and perhaps the State Department’s) scheme from being carried out.
The outbreak of the Korean War provided just the needed timing and
justification. At dawn on Sunday, June 25, Kim Il Sung ordered his forces to
cross the 38th parallel behind artillery fire. Fighting began on the strategic
Ongjin Peninsula in the west; within an hour Kim’s troops were attacking all
along the 38th parallel. Within the first few days, the South Koreans were
routed, forcing Syngman Rhee and his government officials to evacuate
Seoul; this was the contingency that would thoroughly change the military and
political landscape of East Asia. On June 27, three days after the North
Koreans launched the surprise attack, President Truman announced that he
had ordered the Seventh Fleet to the waters between Taiwan and the
mainland to prevent offensive operations against and from the island. He
meanwhile specified that the “determination of the future status of Formosa
must await the restoration of security in the Pacific, a peace settlement with
Japan, or consideration by the United Nations.”8 The statement contained no
reference to his January pronouncement. But when affirming that a
determination of Taiwan’s status would have to await appropriate
international action, the president had pulled away from the earlier position
taken by him and Acheson that the island was for all intents and purposes
Chinese territory. As fully exemplified in Acheson’s personal explanatory
letter to MacArthur dated July 24, 1950, only on the premise that the island’s
legal status was unsettled could Washington claim that its intervention did not
constitute interference in Chinese internal affairs and was intended only to
freeze its political status until a suitable international agreement had
peacefully decided the island’s future. Such an “interim intention,” as
Acheson described it to MacArthur, surely presented difficulties vis-à-vis
the Nationalists on Taiwan and might not be the only, or even the best way, of
clarifying the new American position. But the secretary of state was
convinced that every effort should be made as soon as possible to arrive at a
common understanding with America’s allies, particularly with the British,
and he sought the SCAP chief’s support and understanding.9
If Acheson’s rationale was understandable to MacArthur, it was
categorically unacceptable to Chiang Kai-shek. On receiving Truman’s
official announcement, delivered by Robert Strong, the U.S. chargé d’affaires
in Taipei, Chiang was furious at Truman’s statement about Taiwan’s unsettled
legal position, which he perceived as a humiliating downgrade of the island
to “a mere piece of American colony.”10 And yet pragmatic considerations
soon came to the fore. As long as Nationalist governance in Taiwan remained
virtually unaffected, Chiang was ready to tolerate a neutralized Taiwan Strait
(at an official level he ordered his government to fulminate against such an
arrangement “at any cost”).11 Perhaps Chiang was being a bit too optimistic
about the “unaffectedness” of his leadership and governance in Taiwan. As a
“client-patron relationship” was created between Taiwan and the United
States as a result of the Korean War, Chiang would find that the autonomy he
had enjoyed in the decision-making process in the mainland era would be
long gone in the post-1950 Taiwan era, a fact further illuminated in Chapters
9 and 10.
 THE TAIWAN BASTION STRENGTHENED

In retrospect, one major event leading to the accidental state on Taiwan was
Mao Zedong’s decision to ally with Soviet Russia and to approve and
support Kim Il Sung’s war plan for Korea. Without a doubt, the war on the
Korean Peninsula provided both hope and opportunities to the ailing
Nationalists on Taiwan. However, the challenges ahead were far greater than
Chiang Kai-shek and his cohorts might have expected. It was no secret that
Chiang had long craved a general war in East Asia that would lead to a
consolidation of his power base in Taiwan and an eventual American war of
“liberation” against the Chinese mainland. A series of confidential telegram
exchanges around March 1950 between Chiang and Shao Yulin, Chiang’s
ambassador in Seoul, incredibly reveal that the desperate Nationalist leaders
were exploring every possible means, including such wild ideas as
dispatching their secret agents to South Korea to trigger an armed conflict
with the communist north, so as to bring about a total shift of U.S. policy in
East Asia.12 From Taipei’s point of view, if Taiwan was necessary for
American defense, then Washington must prevent the Chinese Communists
from taking possession; if there was a war in the Far East, then it was folly to
give up any advance base, like Taiwan. What Chiang and his followers
worried about most was, if the island was not necessary for American
defense, then there would be no obstacle in stabilizing good relations and
trade with Communist China. This meant peace, and peace was what the
island-based Nationalists feared. A man longing for World War III to save a
hopeless situation, Chiang in the months before the Korean War incessantly
ordered papers and draft plans to be prepared in anticipation of that
eventuality.13
Not surprisingly, therefore, immediately after the war broke out in Korea,
Chiang offered to send 33,000 of his best troops, under Sun Liren’s
command, to fight alongside UN forces. The offer was presumably planted by
none other than Charles Cooke, who won Chiang’s approval over the
opposition of other Nationalist military leaders.14 Initially, Truman was
tempted by Chiang’s offer, but in the end he rejected it on the unanimous
advice of Dean Acheson, Louis Johnson, and the Joint Chiefs of Staff, who
exhorted that acceptance of the offer would divide the United Nations
coalition and might incite the Chinese Communists to attack Korea or
Taiwan.15 In truth, as Robert Accinelli well posited, the introduction of
Nationalist armed forces in Korea would have also violated the spirit of the
“neutralization” of the Taiwan Strait, and contradicted the U.S. objective of
insulating Taiwan from the Korean conflict.16
It remains open to discussion whether Chiang Kai-shek’s offer was
sincere and truly intended to lead to his long-dreamed military rollback in the
mainland, or whether it was little more than a diplomatic gesture. Whatever
the reality, the propagandist effect such an offer brought about was colossal.
General MacArthur, now leading the United Nations Command in the Korean
War with his theater expanding to include Taiwan and the Pescadores, greatly
appreciated Chiang’s overture.17 He personally landed in Taiwan with a
dozen staff officers for a two-day visit between July 31 and August 1, an
appealing diplomatic feat that immensely strengthened Chiang’s hitherto
shaky political legitimacy, boosted Nationalist morale, and elevated the
government’s international visibility. While staying in Taipei, MacArthur
recommended that a direct liaison between his command and Taipei be
established, and that the critical materials shortages on Taiwan should be
rectified. He also agreed with Chiang that a “Far East Command Liaison
Group” be established with Taiwan under MacArthur’s authority, which
would examine the requirements of the Nationalist forces. Last but not least,
without prior consultation with Washington, the SCAP chief authorized
periodic reconnaissance flights over coastal areas of China, in addition to
periodic sweeps of the Seventh Fleet in the Taiwan Strait.18 He also seems to
have made secret arrangements with the Nationalists to station three fighter
squadrons on the island, an allegation repeated in Dean Acheson’s 1969
memoirs.19

8.1General Douglas MacArthur met with Chiang Kai-shek and his top military brass in Taipei.
MacArthur’s visit to Taiwan on July 31, 1950, boosted Nationalist morale and strengthened Chiang Kai-
shek’s legitimacy. (Courtesy of the KMT Party History Institute)

Soon after MacArthur’s visit, a group led by General Alonzo Fox,

MacArthur’s deputy chief of staff, conducted a three-week survey of the
Nationalist military on Taiwan to determine their needs. The report of this
“Fox Survey” mission trumpeted that Chiang’s army was an important backup
for the Seventh Fleet, capable of repulsing a Communist landing given
sufficient aid and proper military advice.20 Although the Fox report
recommended a $158.2 million military aid package, nothing materialized. It
was not until the Chinese Communists first intervened in Korea in late 1950
that renewed military assistance to Taiwan was seriously deliberated in
Washington.
MacArthur’s visit delighted Chiang Kai-shek as much as it annoyed the
upper echelons in Washington, who were alarmed by what they now
perceived to be the two men’s joint effort to determine U.S. policy. Truman
sent his senior advisor Averell Harriman to meet the SCAP chief in Tokyo
two days after he returned from Taiwan. Harriman’s message to the general
was straightforward: “leave Chiang Kai-shek alone.” Fearing that Chiang
might genuinely launch a war with mainland China, the president passed on
his verbal promise via Harriman to the effect that as long as MacArthur
waged war only against North Korea, he would be given whatever he
wanted.21 Truman’s apprehension further deepened, when, shortly thereafter,
MacArthur’s address to the Veterans of Foreign Wars annual conference was
published on August 25. In his address, the general reemphasized that Taiwan
was an unsinkable aircraft carrier and submarine tender, from which a hostile
power could overshadow the central and southern flank of the United States
frontline position in Asia. This statement was not new, but it doubtlessly
conflicted with Truman’s recent policy that U.S. protection of Taiwan was
only a temporary expedient deriving from the conflict in Korea. Politically,
the president was enraged at the general for handing the “Acheson-haters” at
home an argument behind which they could gather their forces for an attack.22
MacArthur’s seemingly unilateral actions equally unnerved America’s
European allies, who wanted to keep the war on the peninsula hermetically
sealed from Mao Zedong and Chiang Kai-shek lest Beijing start taking
“hostages,” particularly Hong Kong and French Indochina. The British were
also worried, viewing the presence of the SCAP chief in Taiwan as a sign of
Washington’s “lack of all direction in its policy toward China,” as well as of
“internal difficulties” in the Truman administration.23
As discord between Washington and London over the Far Eastern
situation was about to heat up, chief policy planners in the State Department
and Whitehall were endeavoring to work out mutually acceptable strategies
to deal with the thorny Taiwan issue. In September 1950, the United States,
Great Britain, and France settled on a unified approach in the United Nations
on the status of Taiwan and the Nationalist Chinese representation. They
agreed that a General Assembly commission should be established to
examine the criteria for settlement of cases of disputed representation, and to
determine Taiwan’s future status.24 In Taipei, Chiang Kai-shek’s reaction
was surprisingly calm. Fully aware of his serious lack of bargaining chips,
Chiang was preparing for the worst. If the PRC were admitted to take part in
UN deliberations, as proposed by a Security Council session in late
September, Chiang would order the withdrawal of Nationalist China from the
United Nations.25
On November 11, the British and the Americans concluded their agreed
resolution. The final draft provided for a commission to study and make
recommendations for the future of Taiwan, after conferring with “all
governments, authorities and parties concerned.” Until the General Assembly
considered and acted upon the resolution, there would be no attacks from or
against the island or attempts to change its status by force.26 However, this
UN strategy collapsed when Mao Zedong ordered massive intervention
against MacArthur’s advancing forces in Korea. Conspicuously, the Pentagon
was now reluctant to accept the proposed resolution in its existing form,
because it would neutralize Taiwan militarily just as the situation in the Far
East was taking a disturbing turn. At the end of 1950, the ban on Nationalist
Chinese offensive operations against the mainland was carefully reevaluated,
and an even more extensive military strategy vis-à-vis Communist China,
with Taiwan playing a much larger, more active role, was under serious
deliberation.27
Like the February 28 incident in 1947, the Communist Chinese
intervention in the Korean War in November 1950 lead to changes in the U.S.
military and strategic perceptions of the island. To be sure, Chiang Kai-shek
and his supporters saw the massive Communist assault on Korea as a boon; a
prolongation of the Korean conflict and a combustible confrontation between
Washington and Beijing would best serve their purposes and interests. No
wonder, then, when learning that Truman had warned MacArthur against the
intended bombing of Manchuria and the use of UN ground forces across the
Sino-Korean border, Chiang was both discontent and dismissive.28 Although
the strategic significance of the Taiwan-based Nationalist government might
now increase, the island’s pending legal and international status remained a
nightmare to the Nationalist leaders. As the situation in Korea worsened
toward the end of 1950, Washington found it imperative to accelerate the
peace settlement with Japan, to pave the way for a “post-treaty security
arrangement” with Japan, now an important forward base for American
military operations on the peninsula.29 One “byproduct” of this peace treaty
making was that a moribund Nationalist China, now rooted primarily in
Taiwan and the Pescadores with a very limited territorial and administrative
domain, was legally fortified.
In early January 1951, less than two months after the PRC joined the
Korean War, President Truman elevated John Foster Dulles from consultant
to ambassador, responsible for formal negotiations on the Japanese peace
treaty.30 Because the United States recognized only the Nationalists and the
British only the Communists as the legitimate government of China, Dulles
decided to conduct bilateral talks with Far Eastern Commission members
recognized by Washington on the Japanese peace treaty, including Chiang’s
government. This negotiating strategy worked well, right up until a final draft
of the peace treaty was forged by the end of March 1951. The British scoffed
at continued American support for the Nationalists in Taiwan and instead
proposed that Beijing be invited to participate in any negotiations for the
conclusion of a treaty. London’s proposal, coming only a few months after the
Chinese Communist entrance into the Korean War, was wholly unacceptable
to Washington.31
Having received assurances from the Japanese government that Tokyo
basically would make peace with the Chinese Nationalists at some point in
time apart from and after the other Allies, in June 1951, Dulles coaxed the
British into issuing a joint memorandum that no Chinese government would
participate in the multilateral peace treaty. Both parties further agreed that,
Japan’s future dealings toward China would be determined by Japan itself on
the basis of its sovereign and independent status, conferred by the treaty.32
Chiang Kai-shek and his top aides were extremely disappointed at the
prospect of being excluded from the peace conference and at signing a
bilateral peace treaty that seemed to place the Japanese, their defeated
enemy, in a position to decide with whom they wished to deal, and
Nationalist China, an ally, in the position of supplicant.33 On the morning of
September 9, when the signing of the Japanese peace treaty by forty-nine
nations was underway across the Pacific in San Francisco, in Taipei Chiang
decided to go on a private hunger strike as a way of expressing his profound
humiliation and fury.34
To Chiang, perhaps a more disturbing issue was the exceedingly slow
pace of the Sino-Japanese negotiations in Taipei, which commenced on
February 20, 1952. A dispute developed when the Nationalists insisted that
the Republic of China be recognized as the legal government of all China and
the Japanese insisted on limited recognition that would not foreclose trade
and other ties with the mainland.35 The State Department instructed Karl L.
Rankin, U.S. chargé d’affaires in Taipei, to mediate the dispute. Meanwhile,
Chiang’s staunch sympathizers on Capitol Hill also pressured both the
Truman administration and Tokyo to allow nothing in the pact that would
permit Japan to act contrary to the U.S. policy toward the PRC. Intense
pressure by the State Department on Tokyo initially failed to budge the
Japanese, who appeared to be deliberately stalling their negotiations with the
Nationalists. A bilateral pact between Taipei and Tokyo was eventually
signed on the afternoon of April 28, 1952, seven hours before the San
Francisco treaty came into force and Japan regained sovereignty.36
It was widely suspected that the Japanese government had employed
delaying tactics in the treaty negotiations to demonstrate their political and
diplomatic autonomy. One of the members of the Japanese delegation,
however, in an informal talk with the British consul in Tamsui, stoutly
maintained that Tokyo had no intention of protracting negotiations until after
the San Francisco treaty became effective.37 Whatever the truth, the 1952
peace treaty between Tokyo and Taipei bore tremendous significance. The
text of the treaty and an accompanying exchange of notes were designed to
allow both the Japanese and Nationalists to claim that their position on the
scope of application of the treaty had been honored. The treaty itself
contained no reference at all to the territorial limits of Japanese recognition
of the Nationalists. To some historians, the semantic ambiguity on the status
of Taiwan’s sovereignty in this treaty flung open the possibility of an
independent Taiwan and was later used by Taiwanese independence
advocates to advance their campaign.38 Nonetheless, the very specification
that the disposition of Japanese property and Japanese nationals in Taiwan
and the Pescadores, and that their claims against the authorities of the
Republic of China in Taiwan and the Pescadores, should be the subject of
special arrangements between the governments in Taipei and Tokyo, had
demonstrated that the scope of Nationalist Chinese sovereign jurisdiction
was confined to the two island regions.39 This was one very important step
toward creating a legally and territorially (re)defined Taiwan-based
Republic of China, whose political repercussions continue to this day.40
 THE PARTY REFORMS

On the diplomatic front, challenges confronting Chiang Kai-shek in securing

the Nationalist government’s international status remained fierce.
Nonetheless, as the threat of a Communist takeover of Taiwan had largely
died down with the onset of war in Korea, Chiang was now more
comfortable in initiating a genuine reorganization of the KMT party so as to
deepen the Nationalist social foundation on the island.41 Indeed, as U.S.
consular staff on the island noted, Truman’s decision to send in the Seventh
Fleet made Taiwan a more secure environment, which allowed Chiang the
breathing room to restructure political leadership within the party and the
government, under the perfect excuse of furthering “mutual cooperation of all
factions.”42 The constant reminders of the powerful threat across the Strait
kept the Nationalists on their toes. They realized that their Taipei-based
regime’s legitimacy, based on its claim to be the central government of the
ROC, could now be challenged relatively easily. Chiang and his cohorts had
to ensure their survival, not only by building up a potent defense force and a
powerful party-state apparatus, but also by functioning as an efficient and
effective government.43
Four days after General MacArthur visited Taipei, on August 5, a
confident Chiang Kai-shek announced the inauguration of the Central Reform
Committee (CRC) to replace the old, near-defunct Central Executive
Committee back in the mainland era, and become the KMT party’s new core
leadership for planning and acting. Chiang’s handpicked sixteen CRC
members, with Premier Chen Cheng and his son Ching-kuo as the key figures,
were relatively young and well educated, and were now his newly trusted
inner circle. To create a fresh party image within and abroad, Chiang
appointed a professor in history and geography named Zhang Qiyun as the
new CRC secretary general.44 Meanwhile, Chiang isolated his erstwhile
political opponents from regional factions and cliques by assigning them to
another newly instituted honorary party organ called the Central Advisory
Committee, thus marginalizing the party veterans.45

8.2 The first meeting of the KMT Central Reform Committee convened on August 5, 1950, shortly after
the war broke out in Korea. (Courtesy of the KMT Party History Institute)

To extend the Nationalist influence deep into Taiwan society, thus

broadening its social base, CRC leaders endeavored to recruit new party
members from different social strata and groups, especially intellectuals, on
the island. By early 1952, more than forty party branches were recruiting
educated youth, with more than 40 percent of Taiwan’s provincial party
members having a high school or college education.46 As the CRC recruited,
it also created a cadre system that strengthened its political and ideological
control at every level of the state administration. Before 1949, the KMT had
made the party branch (qu fenbu) the basic organizing unit and created the
work team (xiaozu) to indoctrinate party members. When reform began in
Taiwan, the CRC made its work teams responsible for enforcing party
policies, producing propaganda, recruiting and investigating members’
backgrounds, and preventing communist infiltration.47
In the early 1950s, as national security remained a primary concern,
Chiang Kai-shek insisted on tightening the grip of party organizations and
disciplining work teams to prevent internal insurgences and enemy
infiltration. To strengthen the KMT party’s legitimacy with the Taiwanese
people and to seek continued support from the international community,
particularly from the United States, new measures had to be taken. The
conflicting nature and incompatibility between tightening the island’s internal
security and maintaining a democratic façade so as to improve the KMT’s
external image were indeed great. One important strategy applied by the
hard-pressed Nationalists was to promote limited, local-level political
reforms. To legitimatize the Republic of China as the central government for
all China, the Taipei-based Nationalist government needed elected
representatives for all China. In 1947 more than one thousand mainlanders in
Nanjing were elected by the Chinese people as members of the National
Assembly, Legislative Yuan, and Control Yuan. After coming to Taiwan,
these representatives were permitted to hold their seats until the next election
could be held on the mainland, thus legitimizing the Republic of China’s
control of the island.48
While seats of the representatives at the central level were frozen for the
purpose of political legitimacy, CRC leaders were convinced that local
elections should be allowed to promote Taiwan’s image as a democratic
country. In January 1951, the first election for county and city council seats
were held. In April, other elections followed for county and municipal
offices. In December, the Taiwan Provisional Provincial Assembly was
organized, its members having been appointed by county and municipal
assemblies.49 With the implementation of local elections, the party’s
nomination system increased its control over the island’s local politics.
Because the party nominees were almost guaranteed to win, local elites with
political ambitions clamored to join the party. This had both positive and
negative results. On the one hand, local elections enabled the party to work
closely with local Taiwanese elites and strengthened its claim of being a
legitimate party representing the people. On the other hand, party
involvement in local electoral affairs encouraged factionalism within the
KMT. Although local party branches tried to co-opt the new factional
leaders, over time that became difficult.50
To the Nationalists, a successful continuation of land reform on Taiwan
was critical to winning the support of the islanders. In February 1951, with
the rent reduction initiated by Chen Cheng in May 1949 nearing completion, a
CRC resolution was adopted offering one-fifth of the island’s arable land for
sale to tenant farmers for a price well below market. Buyers then had ten
years to buy their land by means of produce rather than cash and without
interest.51 Land assessment and agricultural extension offices were
established by the government’s land bureau, which oversaw the startup of
farmers’ and irrigation associations, quasi-government organs that helped
local farmers follow government guidelines. According to one U.S.
investigation report, by July 1952, 114,000 acres of the total 160,000 acres
of public land had been sold, and more than 150,000 tenant farm families
bought land under the program.52 In early 1953, the Land-to-the-Tiller Act
limited the amount of land that could be owned by landlords. Landlords who
lost land were compensated with land bonds and stock shares from four
privatized, government-owned enterprises. Meanwhile, the new landowners
were eligible for loans that could be repaid, with no interest, in ten years.
They also received funds so they could modernize their farms and irrigation
operations. More than one million Taiwanese gained property rights under
the land reform program, and the income of farmers nearly doubled in the
decade after 1949.53 The implementation of land reform between 1949 and
1953 thus helped further popularize Nationalist governance in Taiwan,
leading to a gradual transformation of the relationship between the ruling
mainlanders and the native islanders. Those early reforms, coupled with the
massive aid the Nationalists received from the United States, paved the way
for the island’s huge economic takeoff.
In retrospect, Chiang’s party reform movement, along with his attempts to
deepen the Nationalist political and social base in Taiwan, helped
consolidate the political legitimacy of the KMT and accelerate the accidental
formation of the island state. Less well known is that those reform measures
were also driven by an implicit political competition with, if not a challenge
from, his rivals abroad. After the Communist takeover in 1949, a large
number of anti-Communist, anti-Chiang Third Force Chinese became
refugees in Hong Kong. These Third Force Chinese were of diverse
backgrounds, ranging from former south Chinese warlords and former
Nationalist soldiers, to Chiang’s political rivals and liberal intellectuals.54
With the twists and turns in the U.S. military position in Korea, Washington
hoped that covert support of the Third Force guerrillas on the mainland
would divert Beijing’s attention from Korea and indirectly assist the U.S.
war efforts. Meanwhile, State Department policy designers also believed
that covert support of the development of any resistance movement would
serve as “a natural influence exercising pressure on the Nationalist
Government on Formosa to adopt more effective policies.”55
Beginning in late 1950, Washington began paying more attention to the
Third Force Chinese in Hong Kong. Secret contacts were undertaken
between unidentified Americans, including a Mr. Hartman, and such
prominent Third Force elements as General Zhang Fakui, Xu Chongzhi, and
Tong Guanxian. The Americans agreed to give substantial funds to the Third
Force group, and promised a base of operation for the liberal leaders in the
Philippines.56 In mid-1951, a CIA-operated secret training program was
mounted in Okinawa, and about eighty young Third Force members were sent
there for intelligence technique training under the guise of working for the
Far East Development Company in Guam. The project aimed at producing
skilled Chinese agents and then parachuting them into Guangdong and Hainan
Island. As it turned out, most of the agents who had been parachuted into
southern China were either killed or captured. By late 1952, it was clear that
the Third Force project was a total failure.57
Perceivably, Taipei viewed the American covert support of these anti-
Chiang Third Force Chinese with extreme uneasiness. Chiang Kai-shek
personally regarded the CIA-backed, militarily-oriented training program as
a potential threat to his political legitimacy, when he learned through secret
channels that one reason why Washington was helping the Third Force was
its mistrust of the Nationalist government. In other words, given the
unreliability and incapability of the government under Chiang, Washington
deemed it imperative to cultivate a new, Chiang-free political force in the
event the Chinese Communist regime collapsed.58
The Third Force Chinese might be irksome, but to Chiang Kai-shek the
gravest potential enemies were on the island. In the face of the pro-
independence Taiwanese, the Nationalist government resorted to a carrot-
and-stick approach. On the one hand, the massive arrest of chief leaders of
the Formosa League for Re-emancipation (FLR) was undertaken just before
the war broke out in Korea. After the Truman statement of June 1950, secret
police action was undertaken throughout the island against those who were
potentially opposed to the Nationalist rule, generally labeled as “communist
spies.”59 In mid-August 1950, Premier Chen Cheng publicly admitted that
around 15,000 people in Taiwan were taken prisoners in 1949 for “political
reasons,” and up to mid-1950, 23,000 were arrested for the same rationale.60
This marked the beginning of a decade-long “white terror” on the island.
On the other hand, Chiang was willing to take a softer, conciliatory
approach to pro-independence Formosans abroad. Around May 1951, a
close associate of Thomas Liao named Frank Lim informed the SCAP
authorities that Chiang had sent Qiu Niantai, an old “half-mountainer” from
back in the wartime era who was now serving faithfully under Chiang, to
make overtures to former FRL members in Tokyo. According to Lim, Chiang
showed goodwill by soliciting Thomas Liao, now chairing the Tokyo-based
“Formosan Democratic Independence Party,” and his associates, to rejoin the
Nationalists. Chiang guaranteed the security of their lives once they returned
to Taiwan.61 A recalcitrant Liao responded by issuing a public letter in
August 1951, in which he vehemently denounced the legitimacy of
Nationalist rule on Taiwan and, once again, advocated holding a UN
plebiscite on Formosa to determine the island’s future.62 However, shifts in
the East Asian political landscape after June 1950 marginalized Liao, making
it very unlikely he could successfully challenge Chiang’s leadership. In
hindsight, Chiang’s overture in 1951 might have triggered the gradual
collapse of the Taiwan independent movement under Liao.63 In 1955 several
of Liao’s closest associates decided to break with him and return to Taiwan,
although it took until May 1964 for Liao to give up his political career in
Tokyo and head back to Taiwan himself.
Externally, as a relatively shielded environment became attainable,
Chiang Kai-shek equally targeted his imagined rivals within the party and the
government. Sun Liren, always an American favorite, was not surprisingly
Chiang’s prime target. In the weeks immediately following the outbreak of
the Korean War, there was a sudden increase of reports that Sun was
“sheltering” communist spies in the Nationalist army.64 These reports were
largely the result of a political commissar system, created and chaired by
Chiang Ching-kuo, and much despised by Sun. Adding to Chiang Kai-shek’s
uneasiness about Sun was a proposal from the MAAG around late 1951 that
a joint operations center be created to coordinate military activities on
Taiwan and the adjacent areas, with the chief of MAAG, General William
Chase, and Sun Liren leading the command. Chiang categorically rejected
this idea, viewing such an arrangement as a virtual surrender of his ultimate
authority to the Americans and American-favored Sun.65
 Although the Chiangs were eager to get rid of Sun, they also fretted over
the resultant unfavorable reaction from the United States. It was not until
1955, after the military alliance was legally formed between Taipei and
Washington that misfortune finally descended upon the much loathed general.
In June 1954, Sun was first removed from his post as commander-in-chief of
the Nationalist Ground Forces and made personal chief of staff to Chiang
Kai-shek, a position without any real responsibility. In August 1955, charges
were suddenly filed against him in connection with the activities of a trusted
subordinate who had confessed to being a communist agent and to having
plotted a coup against Chiang. Thereafter, Sun was under house arrest for
more than three decades until exonerated in March 1988, shortly after the
death of Chiang Ching-kuo. It now became apparent that the entire episode
was fabricated in order to sap Sun Liren of all his remaining authority and
influence.66
The other target which the Chiangs, particularly Ching-kuo, intended to
remove was K. C. Wu, another American favorite. If Chiang Kai-shek’s
removal of Sun Liren stemmed largely from the immense military influence
Sun had enjoyed and the unique relations he had with the Americans, then
their desire to get rid of Wu was primarily based on the incompatible
political ideology between the Chiangs and Wu. Like Sun, Wu was once a
powerful figure whom the Americans found a promising candidate for
reforming Taiwan, and whom the island-based Nationalist government
desperately depended on in order to obtain U.S. aid. Because massive U.S.
assistance to Taiwan was practically guaranteed after the Korean War began,
Wu gradually lost his importance. Meanwhile, his animosity toward Ching-
kuo intensified, when the latter was striving to expand the reach of the secret
service throughout the island, thereby overshadowing Wu’s provincial
administration.67 In October 1952, the KMT completed its “party reform”
and held its seventh national congress. A new power structure was built
around the Chiang father and son, with nearly three-fourths of the party
congress members belonging to Ching-kuo’s faction. In 1953, having sensed
that his days in the Nationalist bureaucracy were only going to get more
difficult, Wu resigned from the provincial governorship and flew to the
United States.68 But the story did not end here. Around early 1954, rumors
began to circulate that Wu had embezzled a large sum of government funds
and lived a life of luxury in the United States. In March, Wu answered the
accusations by publicly breaking with the Nationalist government, stating that
the undemocratic policies in Taiwan were alienating other countries from
supporting its efforts to regain mainland China. Wu specifically defamed
Ching-kuo, denouncing his use of secret police on the island and criticizing
the harmful effects of political pressures on the military.69 The political
battles across the Pacific lingered for quite a while, deeply hurting the
images of both the Nationalist government and a onetime promising political
star.
 THE NATIONALIST MILITARY TRANSFORMED

During the crucial months surrounding the outbreak of hostilities in Korea,

both Charles Cooke’s privatized policy guidance and the subsequent U.S.
military assistance at an official level played a crucial part in reconfiguring
the Nationalist military in Taiwan. At first glance, this U.S.-driven
transformation improved Chiang Kai-shek’s military, a prerequisite for the
success of future military operations. From a critical historical perspective,
however, a gradually transformed Nationalist military buildup inadvertently
led to the making of a Nationalist China, whose scope of territorial control,
in retrospect, would be perpetually precluded from stretching beyond its
current island bases.
The first step toward a comprehensive Nationalist military institutional
reform was Chiang’s effort to create a single chain of command. As
described in Chapter 7, in late 1950 Charles Cooke urged Chiang to combine
the two existing military commands, making the ground forces and the
Defense Ministry into one and vesting the ground forces with full authority.
Cooke’s suggestion led Chiang to restructure what had been a confusing
command system. In April 1951, Chiang promulgated a statute aimed at
organizing a new National Defense Council to coordinate disputes between
the military command and the administration.70 But his inchoate policy
planning gave rise to a fierce policy debate, if not power struggle, within
Nationalist military quarters with no concrete results. In May 1952,
pressured by the MAAG in Taipei to create a clearer chain of command in
the defense establishment and to improve military efficiency, Chiang ordered
that a new organic law be put into effect without benefit of the normal
legislative procedures. Accordingly, the National Defense Council was
officially established, patterned after the National Security Council in the
United States. A reorganized Office of the Chief of General Staff was placed
under the Defense Ministry for administration and policy matters but directly
responsible to Chiang in matters of command.71
In May 1954, the National Defense Council was reshaped into a formal
meeting ground where top military and civilian officials could work on
Taiwan’s key economic, mobilization, and strategy issues. The new
hierarchy, said British consular personnel in Taiwan, was an admirable
attempt to prevent any one individual from wielding too much power by
putting a personal enemy or rival in a position in which his decision could be
blocked.72 A correlated arrangement transferred hitherto undefined
responsibility for the military budget and legal matters to the Defense
Ministry. The Nationalist military and security policy planning was now
institutionalized.73
Both the American embassy and MAAG in Taipei welcomed these
institutional changes. From Washington’s perspective, transferring control of
the military budget to a Defense Ministry that was constitutionally under the
Executive Yuan greatly strengthened the civil-executive segment of the
government, making greater civilian participation in military budget matters
possible. Indeed, when MAAG was officially launched in Taipei in May
1951, introducing sound control of the military budget into the Nationalist
hierarchy was one of its major tasks.
In February 1951, instead of accepting the $158.2 million aid
recommended in the Fox report commissioned several months prior, the
Pentagon was only willing to approve a total of $71.2 million in equipment
and supplies for the Nationalist military for the fiscal year 1951.74 Before
delivering this aid, chiefs in Washington were determined that the aid should
be a lever to obtain the desired political readjustments in Taiwan. One target,
therefore, was fostering Taiwan’s financial stability so as to create a
productive, balanced economic system that would not be used solely for a
return to the mainland. In addition, the Nationalists were required to
implement “maximum self-help” and to realize that the United States would
not foot the bill for any “reckless diversion” of the island’s resources to
unjustified military expenditures. It was also decided in Washington that the
MAAG in Taipei, to be established within weeks, would be responsible to
administer the aid program and other related issues.75
To bring Taiwan’s military budget under U.S. control, and to reduce the
island’s unusually high military expenditures—70 percent of the total budget
for the island—policy designers in Washington had shown little sympathy
toward aid to the Nationalist authorities. Assistant Secretary of State for Far
Eastern Affairs Dean Rusk argued that, to fulfill these goals some “serious
arrangements” were necessary and justified, even if their implementation
encroached on Nationalist Chinese sovereignty.76 By May 1951, a much more
explicit demarché had been formulated in this regard as a result of a series of
cross-department debates in Washington. In general, MAAG would be fully
responsible for controlling U.S. military aid to Taiwan and the island’s
military expenditures. The Economic Cooperation Administration (ECA)
mission on Taiwan, backed by MAAG, would exert its influence vigorously
and firmly in the recently established, U.S.-driven Economic Stabilization
Board (ESB) to improve Nationalist fiscal policies and practices. If General
Chase encountered obstacles in exercising necessary control, the State and
Defense departments would join hands to pressure Taipei into concession.77
A State Department aide-mémoire based on the above rationale was
presented to the Nationalist Foreign Ministry on July 20, 1951. It requested
that Taipei devise effective procedures for supervising and controlling
budgets and spending by all levels of government for military and civilian
purposes. It concluded by stating that no proposed U.S. military and
economic aid would be forthcoming until such procedures were achieved.78
Chiang Kai-shek, infuriated at Washington’s intrusiveness, confided to his
personal diary that he worried and wept at night at the thought that control of
his military budget would henceforth be in the hands of the Americans. At
one point, Chiang pondered rejecting U.S. aid so as to keep the nation’s
sovereignty and autonomy intact.79

8.3 Chiang Kai-shek’s first meeting with General William Chase (right), chief of the U.S. Military
Assistance Advisory Group in Taiwan, in the spring of 1951. (Courtesy of the KMT Party History
Institute)

It soon turned out that the Nationalists had no choice but to yield. Ten days
after the aide-mémoire, Karl Rankin expressed his deep concern to the
Nationalist government over the proposed conscription of 15,000 local
Formosans into the army. Rankin deemed the plan politically helpful to
Taiwan’s defense but detrimental to the island’s already dangerous finances.
The Nationalists grudgingly compromised by cutting the number of scheduled
conscripts in half.80 Shortly afterward, when both Rankin and General Chase
learned that the Nationalist government was planning to raise money and
reduce deficits through compulsory savings (up to NTD 150 million) under a
scheme in which local businessmen and the public would exchange cash for
options on stock in government industries, they again jumped in with
objections. Both Rankin and Chase worried that the new program would
result in overall dissatisfaction, especially from the farmers, and might
generate a serious economic drain on the public affecting its productive
spirit.81 To halt the saving scheme, Rankin urged Washington to offer Taipei
an alternative: the establishment by the ECA in Taipei in cooperation with
the Bank of Taiwan of a fund of between $4 million and $7 million, taken
from ECA appropriations. The new fund would enable an increase in the
foreign exchange sales available to private importers and to industrialists in
Taiwan for the importation of prescribed categories of commodities and
industrial equipment. Such an action, Rankin trumpeted, would result in a
total sales increase of approximately the same amount as put into the
operation, with the result of a prompt increase in local currency availability,
which would then be loaned by the Bank of Taiwan to the Nationalist
government.82
The State Department quickly approved Rankin’s idea, and sent the
proposal to the Nationalists. In conjunction with this new formula was the
delivery of another memorandum around the same time, officially requesting
that MAAG be given full permission to participate in Taipei’s budget
preparations, including the spending of Nationalist and American resources
for military use.83 Having sensed that Washington was serious about its
goals, as demonstrated by the sluggish flow of the promised materiel
deliveries, a sober and pragmatic Chiang Kai-shek decided to compromise
so as not to jeopardize Taiwan’s national defense interests and the
desperately needed military aid. On October 12, 1951, despite dissenting
voices among his subordinates, Chiang grudgingly agreed that Taiwan’s
military budget would be prepared in consultation with MAAG and then
referred to the U.S.-influenced ESB for further action. The Nationalist
government would meanwhile seek MAAG’s “advisory assistance” in
matters relative to its budgeting details at the national level. With regard to
the government budgets at local (county and village) levels, Chiang also
agreed that general principles would be worked out jointly by the ESB and
the provincial government.84 As Rankin revealed in his confidential dispatch
to Washington about what he had heard from top Nationalist circles, although
outwardly “stubborn and old-fashioned” and extremely unhappy about an
increasing degree of U.S. control over Taiwan, Chiang was nevertheless “in
a mood to secure almost anything” which might lead to better days for his
anti-Communist maritime redoubt.85
It was a crucial watershed for U.S. policy toward the Nationalist
government and toward Chiang Kai-shek in particular. In a directive to U.S.
representatives in Taipei, Dean Acheson, like it or not, had to acknowledge
Chiang as the “paramount leader of Free China,” exercising strong
influence.86 When the status of the once-abandoned and loathed Chiang had
again been recognized, the security of the Taiwan-based Nationalist China
could become more consolidated. And yet the price that the Nationalists had
to pay was high: They would no longer enjoy absolute autonomy in deciding
the nation’s outstanding issues, particularly those of the military. From a
perspective of realpolitik, Chiang’s compromise in October 1951 provided
the Americans with both the justification and the opportunity to participate in
ESB and its subcommittees, making them able to influence and have access to
records in the Nationalist government’s auditing and other agencies. From the
American point of view, Chiang’s subdued response, as Karl Rankin had
hoped, established the principles that would enable the further development
of detailed mechanisms for effectively implementing policy on the island.87
Although Chiang gave up some sovereignty in control of Taiwan’s national
budget, he regained American support. On the other hand, Washington
probably had recognized that now only Chiang could guarantee compliance
with its demands and also remain in control. This model of bilateral
cooperation, although not always a perfect one, would continue for decades
to come.
 Toward the end of 1954, Taiwan’s economic and monetary picture had
noticeably improved. Local commodity prices had generally stabilized,
government budgets were approximately in line with revenues, and
production in most areas of the island had reached their highest levels since
1949.88 Still, the most salient transformation was in the military. By the
autumn of 1952, at MAAG’s insistence, the Nationalist ground forces in
Taiwan and the Pescadores were reorganized, from 10 armies of 31
relatively weak divisions into 10 armies of 21 combat-ready and better-
equipped divisions.89 This military reorganization, as the British consular
staff in Taiwan observed, the Nationalist leaders found “very hard to
swallow.”90 In the eyes of the British, MAAG was the obvious winner in the
strenuous seesaw battle with the Nationalists. Although Chiang Kai-shek’s
officials might complain about American highhandedness, they may have
been convinced that their government must toe the financial line by compiling
and presenting a rational military budget.91
The improvements in the Nationalist military institutions were also
impressive. Following the creation of the National Defense Council in May
1952, the Nationalist authorities began instituting civil procedures to
strengthen its internal auditing function in the military. By late 1953, with
advisory assistance from MAAG, full responsibility and authority were
vested in a single agency, the Defense Ministry’s Bureau of Budget, rather
than divided among several independently operated military bodies.92 In the
meantime, Chiang Kai-shek granted the ESB broader powers in matters
relating to the budget. With the increased influence of MAAG, the U.S.
embassy, and the ECA mission in Taipei, the ESB evolved into an efficient
and powerful organ for establishing Taiwan’s economic policies.93
In the early 1950s, as the Nationalist Chinese military underwent a
dramatic transformation based on the American line, resistance from the
Nationalist leadership was inevitable. A case in point is the controversy
surrounding the political commissars overseen by Chiang Ching-kuo.94
MAAG decided that the commissars, who were also watchdogs and
informers, had engendered fear, suspicion, and timidity within the Nationalist
forces. In addition, MAAG believed that Ching-kuo directed not only the
system but also the secret police throughout the island.95 When General
Chase proposed abolishing the system, Chiang Kai-shek refused. But when
Chase proposed a MAAG “advisory committee,” attached to the Taiwan
Provincial Peace Preservation (Police) Corps, as a first step in checking
Ching-kuo’s growing influence in the military, a reluctant Chiang consented
to detailing MAAG “liaison officers” to the corps headquarters.96
By the end of 1954, MAAG’s influence was such that, as Karl Rankin
reckoned in a cable to the State Department, the idea of a detailed review by
MAAG of Taiwan’s military budget and fiscal planning before it was
submitted to the Nationalist legislative branch had been firmly rooted.97 In
addition, with the arrangement of a series of ad hoc “MAAG agreements”
between Taipei and Washington in 1951 and 1952, the Americans were given
permission to use airfields and port installations on Taiwanese soil, and
other necessary assistance and facilities. By 1954, these MAAG provisions
had been rapidly extended to other U.S. military units assigned to Taiwan to
assist in the joint defense of Nationalist China, including the shore-based
elements of the Seventh Fleet, the Formosa Liaison Center, CINCPAC
coordinating groups, and a squadron of U.S. Air Force fighters assigned on a
rotational basis, all under the aegis and supervision of the powerful
MAAG.98
Chiang Kai-shek and his top aides, however, were resentful. And the
feelings may have been mutual. During the last months of 1953, for example,
the U.S. representatives in Taipei were angry when they learned that the
Nationalist government had approved its military budget for the next fiscal
year without a prior review by MAAG. From the U.S. point of view, that act
constituted a serious breach of faith, and a series of protests were lodged
with the Nationalists.99 To pacify the Americans, Chiang explained that the
submitted budget was merely a formality at its early stage and that the figure
could not in any event be finalized before he had had the chance to review
and approve it. Chiang then agreed that a finalized and re-estimated military
budget would be prepared for MAAG’s review within weeks.100 The result
of this “re-estimation” was a budget cut (from the original New Taiwan
Dollars 1,100 million to New Taiwan Dollars 919 million), plus an aide-
mémoire from the State Department reminding Chiang that no additional
budget items were permitted unless sufficient funds were available through
increased revenues and that they must be preapproved by MAAG.101
In retrospect, Chiang Kai-shek’s institutional changes in Taiwan’s military
in the early 1950s, although largely driven by the United States, considerably
enhanced the efficiency and transparency of a hitherto inadequate Nationalist
military establishment. Chiang might have found it hard to accept the gradual
“Americanization” of his military forces. In the long run, however, an
“Americanized” Nationalist military establishment might best serve Taiwan’s
security interests in the Cold War. Writing and publishing in 1961, ten years
after MAAG was first set up in Taipei, Chiang’s senior defense officials
wrote that General Chase and his staff had established a sound comptroller,
auditing, and budgetary system in the Nationalist military.102 And yet, viewed
from another angle, such changes also indicated that, henceforth, Chiang’s
military strength and capability would be based largely on, if not confined to,
resources from the United States. As shown in Chapter 9, Chiang’s dream of
counterattacking and retaking the mainland was not entirely a fantasy:
Military operations of varying degrees against Communist China were under
consideration. The reality was, however, that a successful military operation
could not be achieved without U.S. support and consent, ironically just as a
permanent Taiwan-based Nationalist China was taking shape and the
Nationalist military’s quality and policy formulation were at their highest
levels since its disastrous defeat in the civil war and for the first time in
China’s modern history.
 9
Between Mainland and Maritime Strategies

IN THE MONTHS immediately after the outbreak of armed conflict in Korea,

Chiang Kai-shek was busy inspecting military forces and lecturing his
officers throughout Taiwan, a sort of muscle flexing aimed at boosting public
morale and readying the people on the island for a military recovery of the
mainland. Although in early July 1950 the Truman administration turned
down his offer of 33,000 Nationalist forces to fight in Korea under General
MacArthur, Chiang was deeply convinced that the fate of his government was
now closely bound with the situation on the Korean Peninsula. Shortly after
the UN crossed the 38th parallel in the first week of October, Chiang learned
from his own intelligence sources and the SCAP headquarters that Beijing
had begun mobilizing some 400,000 soldiers in Manchuria to be transferred
to the North Korean border. Chiang sensed that an armed clash between the
PRC and the United States was inevitable, although he was still unsure
whether such a clash would eventually result in a general war.1
In early November, when the news confirming Chinese Communist
intervention reached Taipei, Chiang deliberated on follow-up strategies. For
the Nationalists in Taiwan, the best case scenario seemed to be their
participation in the Korean War, thereby placing them in a stronger and more
advantageous position vis-à-vis future development in the Far East.2 Chiang
outlined several key demands in the event that Washington wanted the
Nationalists to join the war effort. Among the most crucial points was an
American guarantee that the Nationalist troops would be allowed to enter
Northeast China via the Korean Peninsula, and that territorial and
administrative integrity be respected after the Nationalists regained control
on the mainland. Meanwhile, Chiang also found it important to secure a
promise from Washington that the U.S. government would cease their support
of the Third Force Chinese in Hong Kong, which had been undermining his
political legitimacy.3
Indeed, as Communist China entered the Korean War, Chiang Kai-shek’s
bargaining position was momentarily strengthened. At the Pentagon, the idea
of throwing 33,000 Nationalist troops into the battle field resurfaced, and
Taiwan’s geopolitical significance once again became a focal point of
discussion, if not debate, in Washington’s Far Eastern military and security
strategy formulation.4 But in Taipei, Chiang Kai-shek had a surprisingly
sober estimate of the overall situation. He prophesied rather precisely that
Washington would in its final analysis reject using his ground forces in
Korea, let alone their entry into Manchuria. Writing in his personal diary
around early November, Chiang foresaw that undertaking a limited degree of
Nationalist naval or air operations along China’s coastal provinces as a way
to distract the Communists might be the only practical way for the island-
based Nationalists to contribute to the war effort.5
Chiang’s sangfroid was a vivid contrast to his and his government’s loud
threats of an imminent counteroffensive against Communist China, but his
inner sobriety and realism can be traced to recent events. Since 1949, when
the defeated Nationalists retreated to Taiwan, Hainan, and the island groups
off China’s southeastern coast, both the rapidly diminishing territorial control
on the mainland and the transformation of these islands as a new power base
had prompted the Nationalist authorities to gradually abandon their
mainland-oriented military strategy. In June 1949, soon after Shanghai fell to
the Communists, the Nationalists proclaimed the closure of territorial waters
lying along the coast of Hebei, Shandong, Jiangsu, and Zhejiang provinces,
including key ports such as Tianjin, Shanghai, Wenzhou, and Ningbo.
Forbidding entry into these port cities, the Nationalists warned that they
would take prompt action against violators and that responsibility for any
resulting harm would rest with the violating vessel. Despite protests lodged
by foreign countries, such as the United States and Britain, the Nationalists in
February 1950 extended the blockade to cover the southern part of China,
including the ports of Fuzhou, Amoy, Swatow, and Guangzhou.6
During this critical period, although the Nationalist military lacked the
strength to launch effective counterattacks on the mainland, its navy was at
least able to stop and search ships flying the flags of either Nationalist China
or the PRC in the territorial waters surrounding Taiwan and other
Nationalist-controlled isles to prevent military supplies from reaching
Communist-held ports.7 The shelling of an American merchant ship Flying
Arrow off Shanghai in early January 1950, along with mine-laying operations
conducted by the Nationalist Navy in waters off Shanghai, as the CIA
observed, demonstrated the Nationalists’ weak but still functional naval
capacity.8 Meanwhile, during the months before the outbreak of the Korean
War, given Chiang Kai-shek’s reliance on Charles Cooke and his STP staff,
and the admiral’s specific emphasis on strengthening Taiwan’s naval defense,
land-mindedness had gradually given way to sea-mindedness on the part of
the island-based Nationalists so as to fit into a changed military environment.
As a result, the maritime strategy, the main spirit of which was to check
Communist operations in China’s littoral areas and defend the KMT island
redoubts, had irreversibly taken root and become an inevitable choice in the
Nationalist strategic thinking and policy formulation.9
After Communist China entered the Korean War, a continued Nationalist
imposition on the closure of its territorial waters and key ports under
Communist control was now in the interest of the United States. When
President Truman ordered the Seventh Fleet to intervene in the Taiwan Strait,
military chiefs in Washington believed that this did not require a cessation of
Nationalist naval activities.10 Rather, as the Fox mission concluded in its
report of September 1950, the Nationalist Navy, operating alone, would be
of particular value to the United States should the efforts of the Seventh Fleet
be reduced due to other commitments at some critical period.11 From a
broader strategic perspective, as George Kennan argued forcefully in his two
separate memoranda to Dean Acheson in the summer of 1950, after the war
broke out in Korea, one troublesome issue confronting the United States was
its serious lack of information in the Communist-controlled coastal areas.
Although by no means confident about Chiang Kai-shek and his leadership,
Kennan held that a well-trained Nationalist force under U.S. control could
improve the current “highly dangerous and not really tolerable” situation in
the Far East.12 In other words, utilizing Nationalist military strength to
monitor mainland China, rather than for the war in Korea, would best serve
such a purpose.
 RECONQUERING THE MAINLAND: WHO NEEDED IT?

It is important to note that, when the Korean War stood out as the most
imperative issue confronting the Truman administration, military chiefs in
Washington were no less impulsive than their Nationalist counterparts in
planning a counteroffensive against the PRC. Although it was Chiang Kai-
shek who dreamed of a military recovery of the mainland, it was the
Pentagon who began transforming Chiang’s military slogans into detailed
courses of action. On December 27, 1950, a national intelligence estimate
commissioned jointly by the State Department, army, navy, and air force
looked unfavorably on the possibility of deploying Chinese Nationalist
troops in Korea. It argued that the use of Chiang’s forces would remove
whatever chance might remain of a political solution to the Korean conflict
and would make Washington’s policy of neutralizing Taiwan more difficult.
More practically, since a majority of UN nations would simply reject such an
idea, deploying Nationalist troops would give impetus to, or at least
providing the pretext for, increased militancy on the part of Communist
China, which in turn might develop into a global war.13
And yet, as the situation in Korea worsened after Mao Zedong rejected the
UN cease-fire resolution, the U.S. Joint Strategic Plans Committee issued a
report calling for the creation of conditions that would bring about “the
eventual overthrow of the Chinese Communist government.” To reduce
Communist Chinese military capability with a minimum expenditure of U.S.
forces and resources, and to contain Communist forces within mainland
China, the U.S. Army proposed a three-phase operation to be undertaken
largely by the Nationalist troops in Taiwan. The first phase (within six
months) would secure Taiwan with the currently available forces, followed
by a military mission that would provide logistical support for Nationalist
forces. The second phase (from the next six months, up to 18 months) would
intensify and augment guerrilla and subversive activities on the Chinese
mainland to undermine Chinese Communist armies, build up Nationalist
forces for anticipated operations on the mainland, and liberate Hainan Island
with Nationalist Chinese forces. The third and final phase would encourage
and supply Nationalist Chinese forces so they could conduct operations on
the mainland and overthrow the Communist regime.14
The army version of that course of action was supported by both the navy
and the air force, whose hawkish chiefs promoted the immediate removal of
the restrictions imposed by President Truman (after the war in Korea) on
deploying Nationalist forces against the Chinese Communists.15 A month
later, on January 27, 1951, the Joint Strategic Plans Committee completed
another thorough investigation of a probable Nationalist counteroffensive
against the mainland. The committee reemphasized its previous stance,
arguing that if the Nationalist forces provided with effective leadership,
modern equipment, and strong logistic support, their deployment in any war
with Communist China would be “most desirable from a military viewpoint.”
The report underscored the fact that the Nationalist forces constituted the
only immediately available ground forces for use on the mainland, and that
their acceptance and use would inspire hope among millions of non-
Communist Chinese on the mainland and non-Communist sympathizers
throughout Asia. In the most optimistic scenario, the report delineated how,
with strong and active logistical support of landing operations by U.S. air
and naval units, the Nationalists could maintain several large-scale guerrilla
bases in South China. By coordinating with amphibious operations, the
Nationalists could also retake and hold airstrips in such southwestern
provinces as Guangxi or Yunnan; thus widespread guerrilla activity could be
fostered in an area that had previously been difficult for the central
authorities to control. The 10,000 to 15,000 troops would remain ashore in
South and Southeast China for an extended period of time, sowing seeds of
rebellion that might in the long term succeed in overthrowing the Chinese
Communist regime but in the short term would keep perhaps one-third of the
Communist first-line troops busy, in addition to an estimated one-third of the
Communist second-line troops currently engaged against guerrillas on the
mainland. In its final analysis, the report claimed that, if taken in conjunction
with the other courses of action now under consideration for the Far East, the
combined results might well distract Communist Chinese attention from
Korea; eliminate Communist logistic support in Indochina; deny all of China
south of the Yellow River to communism; disrupt the economy in the
remainder of China; banish the threat of armed aggression in other parts of
Asia; reduce the effectiveness of Communist Chinese military forces; and
counter the myth of communist invincibility throughout the world.16
As discussions about a possible Nationalist military counterattack were
undertaken in Washington and awaiting a conclusion, Chiang Kai-shek was
working hard to avoid such a possibility, at least for the time being.17 Jay
Taylor points out that, at this stage, a U.S.-PRC war involving Taiwan could
end up in a stalemate and thus be a further incentive for a Beijing-Washington
détente, in which case Chiang and Taiwan would likely end up worse off.18
More realistic reasons, however, might lead Chiang to eschew a war at any
cost. On January 8, 1951, he admonished core members of the KMT Central
Reform Committee to dispel any illusions they may have had about the timing
of the war in Korea making it possible to mount military offensives against
the mainland. Without first strengthening their central power and
consolidating their revolutionary base, Chiang warned, any prospect of
victory would prove to be short-lived or unrealistic.19
Behind this unusual cautiousness lay a deeper political calculation. In
early 1951, when State Department bureaucrats considered the best course of
action against the Chinese Communists, they favored first replacing Chiang
Kai-shek. In a top-secret memorandum dated January 24, they urged
President Truman to set up a “central operations group” that would utilize
and augment existing anti-Communist resistance forces on the mainland. In
the meantime, the memorandum went as far as proposing that Washington
undertake the “alteration of the leadership on Formosa” on an urgent basis.
To achieve this end, it was believed that a coup d’état following preliminary
measures to assure suitable conditions would best serve the U.S. interests.
“With the removal of the Generalissimo and the more undesirable of his
cronies,” some of Acheson’s aides advocated, “the Chinese on Formosa will
accommodate themselves to the new circumstances as indicated by the
United States” and would establish a regime more generally suitable to the
purposes of mainland recovery. Following the changes in the leadership in
Taiwan, the State Department staff further proposed that a small training and
operations group be established there to revamp the command structure, train
amphibious landing teams and other ground forces, provide logistical
support, and, most important of all, provide any necessary liaison between
the new Taiwanese regime and the U.S. military establishments.20
These ideas might sound too wild to be executed and may have been
hypothetical in nature, but they touched into the most sensitive nerve of the
KMT power structure. Sun Liren, obviously aware of Washington’s plans for
military operations against the mainland, had, since early January 1951,
worked to persuade Chiang to entrust him with command power in the event
of a military counterattack or, he said, he would consider resigning.21 In
Chiang’s eyes, military recovery of the mainland was thus closely and
delicately related to the Nationalist internal power structure in Taiwan and
thus must be handled with extreme care. Chiang surely knew that, were a
counteroffensive to occur under U.S. patronage, Sun, always the Americans’
favorite, would play a major role. To have Sun catapulted into a higher
position and take over command of the Nationalist military was the last thing
Chiang wanted.22
It therefore came as no surprise that, despite being militant about
recovering the mainland in his official rhetoric, Chiang privately instructed
his military staff to prepare for Taiwan’s “defense.” In a meeting with his
military staff on January 17, 1951, Chiang posited that were the UN to be
driven out of Korea the Chinese Communists would redirect their attention to
Taiwan. In his worst-case scenario, Taiwan would be massively bombed in
March, followed by an amphibious invasion, probably in May.23 To Chiang,
it was ironic indeed that the safety of his island redoubt had occurred largely
because the U.S. Army in Korea was under threat of a massive Communist
Chinese offensive. Although Chiang was delighted that Taiwan was now
included in America’s defense perimeter, he saw making Taiwan a U.S.
military launching pad against China as foolhardy, particularly when the
distinction between the island at risk and its government were blurred in the
minds of Washington policymakers and when the Nationalist leadership was
just about to be restructured. In early December 1950, considering the
tension on the Korean Peninsula, a wary President Truman noted in his diary
that “I’ve worked for peace for five years and six months and it looks like
World War III is here.”24 Truman probably never realized that the man
widely perceived as longing for that very World War III had quietly placed
his Nationalist regime and power consolidation on Taiwan, rather than
engaging in a risky war with Communist China, as a top priority.
In February and March 1951, in the darkest hours of the UN military
action in Korea, a flurry of policy planning concerning using Nationalist
Chinese forces to relieve pressure on the peninsula was underway among
Washington’s top military and intelligence brass. Under consideration was
America’s covert support of the alleged 700,000 anti-Communist guerrillas
on the mainland, some 300,000 of whom professed allegiance to the
Nationalist authorities.25 In Taipei, Karl Rankin and Charles Cooke were
sounding out Chiang’s top aides on how best to utilize Nationalist troops “in
areas outside Taiwan,” as well as how to transform the island into a UN base
of operations in the Far East. Rankin urged the State Department to reach a
firm agreement with Taipei that would make it possible to use Nationalist
forces in South China when and if the Chinese Communists invaded
Indochina. Cooke went one step further, trying to persuade Chiang to launch
an immediate expeditionary operation to recapture Hainan Island as the first
step toward recovering the entire mainland.26
Discussions of what role the Taiwan-based Nationalists should play
during the Korean War occurred not only in Washington’s executive branches
but also in Congress. On February 12, 1951, House minority leader Joseph
Martin delivered an inflammatory speech in New York, charging that
President Truman was preventing “800,000 [sic] trained men” in Taiwan
from opening “a second front in Asia,” declaring that there was “good reason
to believe” that General MacArthur and “people in the Pentagon” favored
this as “the cheapest operation” that could be mounted in the Far East. On
March 8, the congressman sent MacArthur a copy of his speech, inviting
comment.27 Two weeks later, MacArthur echoed Martin’s call for a U.S.-
backed second front on the Chinese mainland using Nationalist forces,
arguing that such a strategy was in conflict neither with “logic” nor the
“tradition” of invariably “meeting force with maximum counter-force.” When
the statement reached extremely partisan Washington, it stirred a political
earthquake that would seal the general’s fate. On April 11, an agitated
Truman relieved MacArthur of his command.28
One would think that Chiang Kai-shek would have been worried about
losing such a strong supporter of the Nationalist military recovery of the
mainland. But on hearing of MacArthur’s dismissal, Chiang wrote that
although he felt sorry about the injustice done to the general, he was having
“more joy than worry” (leduo youshao) about future developments.29
Considering that a substantial amount of military aid promised by Washington
was pending, along with the potential challenges from Sun Liren and perhaps
other members of the Nationalist military over who would lead the military
command, Chiang thought it out of the question to adopt an immediate
mainland strategy, the price of which might be his paramount leadership
within the Nationalist hierarchy and Taiwan’s national security.30 Chiang’s
best policy, therefore, was to keep the extent of the mainland
counteroffensive acceptable and manageable so as to ensure the legitimacy of
his rule in Taiwan, which was now also the symbol of “Free China.” It was
also in Chiang’s best interest to capitalize on the momentum of the hoped-for
mainland recovery to secure maximum U.S. aid for Taiwan’s defense at a
time when no comprehensive military action was being taken and thus avoid
risking his leadership.31 In hindsight, Chiang’s reluctance to contemplate
mainland recovery at the height of the Korean War may have inadvertently
shaped Taiwan’s military as defensive rather than offensive in nature,
providing a basis for Washington’s readiness to reach a mutual defense pact
with Taipei in late 1954.
 THE HAINAN OPERATIONS AND COASTAL RAIDS

Although there was no shortage of Nationalist military planning to defend

Taiwan, it was not until July 1951, more than twelve months after the war in
Korea had begun, that Nationalist military chiefs, with advice from Admiral
Charles Cooke, came up with a relatively detailed scheme for a military
counteroffensive against the Communist mainland, code-named “3–7–5.”
According to that plan, “once readily prepared” the Nationalist forces would
launch amphibious landings on Hainan Island and the Fujian provincial coast,
where preliminary beachheads could be created for follow-up operations.32
Chiang’s reaction to the plan, however, was tepid. He scolded his military
subordinates for the limited geographic scope of the proposed military
operations and ordered a reevaluation. Privately he began to wonder whether
any mainland counterattack would occur during his lifetime. On August 8, a
week after the proposal was presented, Chiang admitted in his diary that the
restoration of the country was “almost impossible” in the foreseeable future
and that henceforth every plan must be designed “for the success of my
successors, not for my own success.”33 When Cooke pursued the issue of
retaking Hainan with Chiang in late 1951, an unimpressed Chiang grumbled
privately that the idea was a plot hatched by the Western imperialists to
fulfill their goals at the expense of Nationalist military strength.34
It was thus understandable that, as early as 1952, some core intelligence
staff in Washington began doubting Chiang Kai-shek’s intention to recover the
mainland. In February 1952, the Joint Chiefs of Staff proposed “a show of
force” along China’s coast to enhance the U.S. position with Beijing in the
Korean theater, once again seriously contemplating the use of Nationalist
forces.35 In its analysis, the Pentagon believed that the Nationalists’
recapturing Hainan would be militarily, psychologically, and logically
valuable to the United States in containing the Chinese Communists’
aggression in Southeast Asia. Seizing Hainan would both divert Chinese
Communist forces from Korea and raise the morale of all anti-Communist
Chinese. Strategically, returning Hainan to Nationalist control would make it
a base for counter-operations and for possible future land, sea, and air action
against the mainland.36 Thus a new directive was sent from Washington to
MAAG in Taipei recommending that the current training programs for the
island be expanded to provide for the possibility of two Nationalist army
divisions in areas outside Taiwan.37
Chiang, however, outwitted the increased U.S. pressure to retake Hainan
by ordering his military staff to formulate a counterproposal, in which the
main targets for the preliminary landing operations (were these to be
undertaken) remain concentrated on the Fujian littoral, with Fuzhou as the
focal point. If the situation improved, Chiang would consider extending
military operations as far north as Shanghai and Nanjing and as far south as
Guangzhou. Against the Pentagon’s express wishes, Hainan was not even
mentioned in this latest policy design.38 On March 26, 1952, General Frank
Merrill, one of Joseph Stilwell’s closest lieutenants during World War II and
now a representative of Washington’s military intelligence establishment,
arrived in Taipei to meet with Chiang Kai-shek.39 In their discussions,
Merrill emphatically expressed Washington’s grave concerns that Chiang did
not want any kind of military counterattack. Chiang was shocked but neither
admitted nor denied that he was against a counterattack, only confirming that
recapturing Hainan was indeed the last thing he had on his mind.40
As the war in Korea entered a stalemate in the spring of 1952, pressure
from Washington for a prompt and effective Nationalist operation to retake
Hainan escalated. In May, Admiral Arthur Radford, leader of the U.S. Pacific
Command, visited Taipei and tried to persuade Chiang Kai-shek to undertake
the Hainan operation. Radford’s visit greatly alarmed the British consular
staff on the island, who viewed his presence as an indication that Washington
might “de-neutralize” Taiwan, assist in the Nationalist military actions along
the Communist China coast, and accept Nationalist military help in Korea.
British apprehension further intensified when there was a coincident renewal
of inflammatory talk about “mainland recovery” within the KMT party.41
The true scenario, however, proved rather different. During the meeting
between Chiang and Radford, the initially amicable discussion took on a sour
tone. The admiral underscored Hainan’s strategic value, including its
importance to the worldwide anti-Communism cause. Chiang argued that any
attempt to retake the island would cost Taiwan at least ten divisions of armed
forces, in addition to year-long efforts to eradicate local Communist
influence and consolidate the new power base, all of which Chiang thought
too high a price to pay. Radford found it ridiculous when Chiang told him
that, while reconquering the mainland would boost the Nationalist morale,
recapturing Hainan could only do the opposite.42 Later, when William
Fechteler, the U.S. Chief of Naval Operations, and, again, Arthur Radford
visited Taipei and urged Chiang to occupy Hainan under U.S. sponsorship,
Chiang remained unmoved.43 Even the British came to see that the incessant
pressure was from the United States on the Nationalists, not the other way
around. In his field report to London, the British consul in Tamsui, E. H.
Jacobs-Larkcom, depicted the U.S. military representatives on Taiwan as in
an “impudent mood,” prompting the Nationalists to further demonstrate their
military capability against the Chinese Communists. Probably not fully aware
of the details of the proposed Hainan operation, the British saw the U.S.
toughness as a political maneuver to push the peace talks in Korea and to
influence the presidential election campaign at home.44
While the Hainan operation stagnated, the marine-based raids along the
Fujian and Zhejiang Coasts, backed by the CIA, were up and running. In
November 1950, several months before the Joint Chiefs of Staff had
approved aiding guerrilla movements as a way to check the Chinese
Communists, the CIA entered into secret negotiations with top Nationalist
intelligence brass for a joint program to launch clandestine attacks against the
mainland. The original plan, according to the now-declassified official
Chinese files, was for the CIA to provide a well-trained Nationalist guerrilla
unit of about a thousand men with enough ammunition to infiltrate and
sabotage Communist military and other infrastructure facilities, particularly
the railways, along China’s northeastern and southeastern coastal areas. A
small isle or two would be the secret base of contact between the CIA agents
and leaders of the guerrilla unit, as well as the storage space for the
ammunition provided by the CIA. Chiang approved the idea and designated
his trustworthy intelligence chief Zheng Jiemin to handle the details.45
Covert collaboration with the Nationalists along mainland China’s coastal
areas had become even more imperative owing to the CIA’s failure to predict
Communist China’s entry into the Korean War.46 In March 1951, CIA
personnel began streaming into Taiwan under the cover of Western
Enterprises Incorporated (WEI), a private military procurement agent for the
Nationalist government. (Charles S. Johnston, who initiated the secret contact
with the Nationalists, became the president of the Pittsburgh-headquartered
WEI; William R. Peers directed the WEI base in Taipei.) Accompanying the
CIA personnel was the first batch of munitions for the guerrillas, including
1,740 boxes of high-explosive charges, 680 carbines, 420 light machine
guns, 200 pistols, 25 boxes of radio equipment, 70 rocket launchers, and
379,000 rounds of ammunition.47 A string of Nationalist-held isles off
Zhejiang Province, including Yushan, Pishan, Nanqi, Beiqi, Yijiangshan, and
Upper and Lower Dachen were designated as the operational bases for the
WEI-led guerrillas’ organization, training, and covert coastal raids. An
immediate task was to bring the disparate anti-Communist guerrilla groups
already on the isles under a more centralized command structure, a task that
Chiang Kai-shek assigned to General Hu Zongnan, his onetime favorite in the
mainland era. In July 1951, Hu established a guerrilla headquarters on
Dachen, as well as a Zhejiang provincial government, a small symbolic sign
of continuing Nationalist control over Chiang Kai-shek’s home province.48
The irregular maritime redoubts along Zhejiang’s coast soon extended to
larger islands off the Fujian coast, chiefly on Quemoy and Matsu.
Meanwhile, three WEI-directed training centers were set up in Tamsui,
Magong (on the Pescadores), and Quemoy, where programs such as the
Guerrilla Leaders Course, Combat Intelligence Course, and Agent Case
Officers Course were mounted to train thousands of Nationalist intelligence
cadets.49 According to one Nationalist intelligence document, by March
1952, 149 cadets had completed the WEI training program in Tamsui and
been sent to conduct underground activities in northern Burma, Yunnan, and
Hainan Island.50
From the outset Chiang Kai-shek had been wary of the WEI personnel and
the clandestine maritime activities that would likely come under their sway.
Seeing them as short-tempered, difficult to get along with, and eager for
quick successes and instant victories, he installed Madame Chiang as chair
of the “Guerrilla Committee,” where members of the WEI and Nationalist
intelligence establishment could meet, as a way to restrain the WEI
personnel.51 But Chiang came to realize that the advantages of the WEI
program far outweighed its disadvantages, for the WEI operations along
China’s coast would keep the momentum of “recapturing the mainland”
relatively risk free, without issues such as who should lead the command in
the event of a genuine mainland offensive. In addition, the practical value of
the WEI-led activities seemed impressive, in that the raiding activities
enabled the Nationalists and the Americans to gather firsthand information
from China’s eastern coast in addition to sabotaging Communist facilities.
Moreover, Chiang may have deemed the raids as gratifying opportunities to
verify and appraise the capabilities of the Nationalist armed forces. That
reality check, however, disillusioned, rather than strengthened, his hopes for
a return to the mainland.52
Between mid-1951 and mid-1953, several dozen covert coastal
operations were conducted off Zhejiang and Fujian provinces, ranging from
petty hit-and-run coastal harassments and ship interceptions to large-scale
raids claiming thousands of lives. The payoff from these operations,
however, appeared modest at best, having more of a propaganda effect than
any substantial military or strategic merit, but allowing the Nationalists to
claim that their “mainland counteroffensive” was still alive.53 By the early
summer of 1953, with a cease-fire in Korea in the offing, the WEI began
reevaluating the effectiveness of its raid program. Believing that the
evidently increased Communist naval strength precluded Nationalist guerrilla
force landings, the WEI decided to withdraw from Dachen and the adjacent
isles, which its personnel now deemed it as “threatened” and having “little
tactical value.”54 In addition, the friction between MAAG and WEI, and
between WEI and the Nationalist authorities, who were unhappy with the
dubious character and highhandedness of some CIA personnel, further
overshadowed the program. It took another year and a half for the CIA
officially to end its WEI business; by March 1955, WEI’s responsibility for
coastal raiding and maritime interdiction had been transferred to MAAG.55
 MAINLAND HANGOVER

A maritime military strategy was conspicuously in the best interest of Chiang

Kai-shek and his leadership on Taiwan. As long as the war in Korea
continued, Chiang could exploit the situation by using the pretext of an
intended mainland offensive to seek the aid he desired. After the inauguration
of the Eisenhower administration, when employing Nationalist forces outside
Taiwan was still a heated proposal, a shrewd and well-calculating Chiang
ordered his subordinates to draft an outline of the supply plan for a
counteroffensive on the mainland. Chiang boldly requested an amazing
amount of ammunition, 553 planes and 622 ships of various sorts, plus 36
divisions of ground forces and corresponding military supplies for the
“initial stage” of the counteroffensive, with more items to be expected for the
latter stages of the putative mainland operations.56
This was by no means the only episode demonstrating Chiang’s
manipulation of the professed mainland counteroffensive to achieve political
or diplomatic ends. The issue surrounding the 35,000 Nationalist internees in
Vietnam is another good example. By the middle of 1951, when the Hainan
operation was enthusiastically advocated by the Americans as a way to
distract the PRC from the Korean War and, more recently, to cut the Chinese
Communist support of Vietminh, Chiang was dwelling on the best strategy to
exploit this agenda. Considering a strained military budget within the
Nationalist government, along with the very fact that the internees essentially
belonged to Bai Chongxi’s old Guangxi Clique, Chiang preferred sending
these ex-soldiers back to Southwest China to conduct guerrilla warfare,
rather than absorbing them into the Nationalist army in Taiwan.57 Learning
that the French authorities would neither repatriate these Nationalists nor
rearm them for the purpose of fighting the Vietminh so as to avoid provoking
the Chinese Communists, in the spring of 1951, Chiang turned to the United
States for a better solution.
 From a strategic point of view, officials in the State Department did not
entirely discard the idea of rearming the interned Nationalists and using them
in Indochina. The idea was particularly attractive because, at the moment,
Washington was determined to assist the French in Indochina, but without
utilizing American ground forces.58 To ascertain whether such an idea was
feasible, in July 1951 Karl Rankin proposed that General William Chase
personally fly to Vietnam to negotiate with the French. The visit was called
off at the last minute when the U.S. diplomatic staff in Saigon gave an
unfavorable evaluation of Chase’s presence in Vietnam.59 As Washington
continued to press Taipei about the Hainan operation and other possible
military action along Southwest China, Chiang decided to use the issue of the
internees as a bargaining chip. On August 29, 1951, Wellington Koo met with
Dean Rusk at the State Department, emphasizing once again the importance of
rearming the Nationalists in Vietnam in case the Far Eastern situation became
more troubled. With Chiang’s prior consent, Koo implied that Taipei did not
object the use of these troops either in fighting the local Communists or
recovering Hainan, so long as they were not assimilated into the French
forces but were allowed to operate as separate units.60
Both the State and Defense departments were tempted by such a formula,
but when Jean de Lattre de Tassingny, French high commander and
commander-in-chief of the French forces in Indochina, visited Washington in
September that year, he repeated emphatically that these actions, including
rearming or repatriating the interned Nationalists, could be considered
provocative by the Chinese Communists and should be avoided at any cost. It
was not until late 1951 that Washington became aware that Taipei’s true
intention was to desert the internees, and the United States gradually shelved
the issue.61 In the spring of 1953, when a cease-fire in Korea was expected,
rearming and using the Nationalist internees was out of the question, and the
French authorities finally agreed to their repatriation. Still, Chiang Kai-shek
was deft enough to talk the MAAG in Taipei into subsidizing the repatriation.
Emphasizing the government’s lack of military budget and a welcome
alleviation of the island’s manpower shortage the return of the internees
might bring about, Taipei sought Washington’s permission to appropriate
parts of the mutual security funds for the repatriation.62 The State Department
was aware that Taipei’s request was a maneuver to obtain U.S. financing for
its additional paramilitary projects. Nonetheless, the Eisenhower
administration agreed on humanitarian grounds to utilize Section 303 of the
1949 MAP Act to authorize the expenditure of funds to meet an “emergency”
relief problem in the general area of China.63 By July 1953, approximately
23,000 Nationalist internees were transferred to Taiwan.
The most prominent case illustrating the island-rooted Nationalist China’s
mainland hangover in the early 1950s was Li Mi and his irregulars in
northern Burma. In the spring of 1950, Chiang Kai-shek gave Li a political
mandate to chair the exiled “provincial government” of Yunnan and provided
a moderate stipend as a way to control Li’s forces from afar. Throughout the
summer of 1950, the ragged Nationalist irregulars fought with the Burmese
army and struggled to retain their base of operation in the Shan State. As their
cause seemed doomed, the CIA entered the scene, subsidizing and regrouping
what Washington’s military intelligence chiefs believed might be instrumental
in blocking further Communist expansion in Asia after the war broke out in
Korea.64 In late 1950, a CIA-operated Southeast Asia Defense Supplies
Corporation which resembled the WEI establishment in Taiwan, was set up
in Bangkok to render covert support to Li Mi (code-named Operation Paper).
In the months that followed, Taipei joined the CIA in making parachute drops
of ammunition and military equipment to the irregulars in northern Burma.
With the new supplies, Li Mi’s forces underwent a period of vigorous
expansion and reorganization. Training bases staffed with CIA and
Nationalist instructors flown in from Taiwan via Thailand were constructed
along the Burma-China border, and by the spring of 1951 Li had over 4,000
men under his command.65
 In April 1951, the attempted reconquest of Yunnan began when Li Mi’s
2,000 irregulars crossed the border into Southwest China. Accompanied by
CIA advisers and supplied by regular airdrops from unmarked C-47s, the
forces moved northward in two columns, capturing Gengma in southern
Yunnan without any resistance. However, as they advanced north of Gengma,
the PLA counterattacked, causing huge casualties among the Nationalist
irregulars. Li Mi and the survivors fled back to their Burmese base after less
than a week in China. Undeterred by this crushing defeat, Li later dispatched
another 2,000-man contingent into southern Yunnan. But they too were
overwhelmed, and in July 1951 were driven back into northern Burma.66
Chiang Kai-shek well understood that these CIA-driven adventures bore
marginal if any military or geo-strategic significance to Taiwan’s defense and
security. And yet the political and psychological effect these adventures
registered could not be simply ignored. When summoned to Taipei to meet
with top Nationalist authorities in the early months of 1952, Li Mi claimed
that he had managed to augment the size of his “national salvation army”
considerably by virtue of the counteroffensive. Other high officials in Taipei
replied with an unconfirmed statement that the Yunnan guerrillas, who
remained staunchly loyal to the Nationalist government on Taiwan, had
cooperated with Li during the invasion and that Li returned with 30,000 men
after going in with only 3,000. No one needs to be surprised that Chiang was
more than pleased to take advantage of Li Mi’s wild escapade as clear
evidence that Taipei’s determination to recover the whole Chinese mainland
was alive and kicking.67
During the Korean War, as the necessity to cultivate anti-Communist
forces to counteract the Chinese Communists continued to be felt in the
United States, the CIA redoubled its support for Li Mi despite the disastrous
defeat in the summer of 1951.68 Late that year, the exiled Nationalists
reopened the old World War II landing strip at Mong Hsat to handle the large
two- and four-engine aircraft flying in from Taiwan or Bangkok. Enormous
quantities of arms and goods were forwarded to Mong Hsat by the Southeast
Asia Defense Supplies Corporation in Bangkok, and with the refreshed
supplies, Li Mi press-ganged 12,000 soldiers from the hardy local hill tribes,
including the Karens and the Mons. During the first half of 1952, Li had
concentrated his expanded forces in a long, narrow strip of territory parallel
to the Yunnan border, where the indefatigable general seemed ready to launch
yet another bid to retake his home province at any time.69
In Taiwan, Chiang Kai-shek’s attitude was to render possible logistical
and material support to the Nationalist exiles in northern Burma at a
minimum cost, thus maintaining a semblance of mainland strategy. To achieve
this end, Chiang ordered his military staff to supply the irregulars with
gasoline and spare parts, although privately he had already had serious
doubts about whether the ongoing American attempt to use Li Mi against
Communist China would really work.70 While the need to keep Nationalist
military presence in the Asian mainland was widely perceived as necessary
in Taipei’s political quarters, at the diplomatic front, the pressure had grown
to such an extent that Chiang was pressed to give Li Mi’s cause a second
thought. In March 1953, shortly after repelling Li Mi’s forces, now consisting
of not only the Nationalists but also the Karens and the Mons, from a full-
scale invasion of eastern Burma, the Burmese government charged the
Nationalist government with unprovoked aggression before the United
Nations. Despite Washington’s efforts to sidetrack the issue and Taipei’s
denial of any responsibility for Li Mi, Rangoon produced reams of photos,
captured documents, and testimony convincing enough to win a vote of
censure for Nationalist China.71
As a result of this international embarrassment, Washington began putting
pressure on Taipei for a complete withdrawal of the Nationalist remnants
from Burma. Initially Chiang Kai-shek refused to compromise for two
primary reasons. Taipei realized that it actually exercised little control over
Li Mi’s irregulars from a distance, and whether Li and his followers would
be willing to comply remained questionable.72 Moreover, as Chiang
confessed to Karl Rankin, the withdrawal would indicate a virtual
abandonment of Nationalist China’s last visible military foothold on the
Asian mainland, and he thought it next to impossible to organize any similar
anti-Communist forces in the future.73 However, when Li Mi asked Taipei to
send more munitions to support his resistance in eastern Burma, Chiang and
his top aides saw no point in becoming further embroiled in a cause about
which very few in Taipei knew the details. In May 1953, the Nationalists
accepted the convention of a four-nation military commission (Burma, the
United States, Taiwan, and Thailand) in Bangkok to deal with the issue. In
November that year, some 2,000 evacuees began marching to the Burmese-
Thai border and were later flown to Taiwan by General Chennault’s Civil
Air Transport. Chiang, again using the government budgetary constraints as
an excuse, secured Washington’s support in subsidizing half of the expenses
for the entire withdrawal operation.74 As a client state under American
patronage, Taiwan and its leaders were forced to comply with the decisions
made in Washington, DC. Nevertheless, Chiang once again showed his
adeptness at enlarging his maneuvering room with the United States.
9.1 Li Mi’s Nationalist guerrillas are warmly received by local Taiwanese people after the guerrillas’
withdrawal from Burma in the fall of 1953. (Courtesy of the KMT Party History Institute)

Conceivably, the withdrawal of the two Nationalist exiled forces from

Vietnam and Burma in 1953 was closely related to the situation on the
Korean Peninsula. As the war in Korea drew to an end, these two Nationalist
forces were no longer seen as useful in distracting the Chinese Communists.
To Chiang Kai-shek, the psychological and symbolic blow was stronger than
its substance. Henceforth, there would be no Nationalist military presence on
the Asian mainland visible and hefty enough to convince the world and the
people of Taiwan that, even without foreign assistance, military conquest of
the Chinese mainland was still possible. Perhaps this was exactly what
Chiang Kai-shek had desired up to this point—making the island of Taiwan
both a secure power base and a safe haven for “Free China.” This might be
true, although it would take another formal treaty with Washington to
complete the formation of Nationalist China on Taiwan.
 10
The Making of an Island State

CHIANG KAI-SHEK was correct when, as war erupted in Korea in June 1950,
he thought that the fate of his government on Taiwan would be closely tied to
the situation on the peninsula. When negotiations over the Korean armistice
entered their concluding stage in the early summer of 1953, Chiang was no
less insecure than South Korean president Syngman Rhee, who had
demanded a mutual security treaty with the United States as a precondition
for his acceptance of the cease-fire.1 For the past three years, the armed
conflict in Korea had been Chiang’s deliverance, and, ironically, the Taiwan-
based Nationalists’ interests lay in the war’s extension, not its termination. In
a series of three personal letters to President Dwight D. Eisenhower in April
and June 1953, Chiang revealed his own concern about the “traps” awaiting
Washington in any negotiations with the Communists.2 When receiving
Senators Everett Dirksen and Magnuson Warren in Taipei, Chiang tried hard
to persuade the visitors that a truce in Korea could by no means solve all the
problems threatening the free world. “What is at issue is not on the Korean
Peninsula, but on the Chinese mainland,” Chiang exclaimed. And Chiang did
not hesitate to make it known to the Americans that he deemed it an honor to
take the lead in annihilating the Communist regime in China.3
However, when considering the military and political reality, Chiang
might have found it hard to believe what he had said. An ultra-confidential
report on Nationalist intelligence activities submitted to him in early 1953
revealed that, while Taiwan’s security was markedly increased, the strength
and capability of the Nationalist underground network on the mainland was
rapidly disintegrating, if not disappearing altogether. Chiang was
dumbfounded to learn that, by the end of 1952, only 12.2 percent of overall
intelligence came from the mainland, compared with 49.9 percent from
Nationalist-held territories and 18.1 percent from Hong Kong and Macao.
The report candidly recognized that the Nationalist secret service was
particularly weak in north, northwest, and northeast China.4 In addition, only
29 out of 107 radio stations installed on the mainland in the previous years
were still operating, with 8 suspended, 30 losing contact, and the remaining
40 out of order or only partially functional. Contrasted with a vigorous plan
for training, financing, and dispatching secret agents to infiltrate the mainland
immediately after the war in Korea, Chiang’s top intelligence chiefs now
confessed that they found it more and more difficult to establish a sound
network in Communist-controlled areas capable of gathering accurate
information, a prerequisite for the Nationalists to take effectual military or
political action there.5
Chiang’s awareness of the situation helps explain why, when the new
Eisenhower administration declared a “deneutralization” of the Taiwan Strait
in February 1953, thus removing restraints on Nationalist operations against
the mainland, it was not entirely a blessing to Taipei. As one British field
report pointed out clearly, the Nationalists were actually not prepared for the
“unleashing.” Having gone from being an unattainable but useful propaganda
weapon, the British consul in Tamsui, Jacobs-Larkcom, suggested that the
counterattack plan had suddenly become a concrete “problem” for Chiang
Kai-shek, who now asserted that there would be no attack until his
government was fully prepared.6
With a mainland military offensive all but impossible, a pinpointed,
relatively small-scale maritime effort stood out as one of very few options
Chiang could use to attract worldwide attention and aid. The small peninsula
of Dongshan, located between Quemoy and Swatow, jutting out of the
southern Fujian coast, which was transformed into an island at high tide,
became the target of a Nationalist plan. The idea was to drop a regiment of
paratroops to neutralize the local Communist battalion, take control of the
isthmus, and hold off Communist reinforcements from the mainland. An
amphibious landing would then follow to wipe out the opposition.7
On the early morning of July 16, 1953, about 600 Nationalist paratroopers
were dropped onto Dongshan, where they at first met little resistance and
were able to hold their beachhead. But because of a mistake made in
calculating the tide, the scheduled amphibious landing of 5,000 Nationalist
troops was delayed for several hours, and until they arrived, the paratroopers
bore the brunt of the opposition alone. Even with the arrival of the
Nationalist regulars, the overwhelming number of the PLA forced the
Nationalists to withdraw the next day. The raid ended by claiming 3,300
Nationalist soldiers, in addition to the loss of two tanks, two fighter planes,
and three LVTs.8
Despite domestic and international news coverage reporting the
Nationalists’ bold thirty-six hour raid and the short-lived occupation of
Dongshan, the entire operation, the last WEI-advised raid, was deemed a
catastrophe even by Chiang Kai-shek.9 The deficiencies that had become
evident in the course of the operation, along with the end of the armed
hostilities in Korea, marked the raid as a turning point for the Nationalists
and the CIA. It was the beginning of the end for WEI and its support for the
Nationalist guerrillas. Irregulars could now be converted to regular army
status and be supervised by MAAG.10 Significantly, the episode accelerated
the U.S. redefinition of the scope of Nationalist military operations and
reinforced the idea of the Nationalist military as being defensive, not
offensive, in nature. As a result of the disastrous raid, MAAG tightened up its
position, strictly urging Taipei that no action should be taken against the
Communist mainland without prior clearance from the United States. General
Chase told the Nationalists that any operation involving 500 or more men, or
a coastal raid of battalion, regiment, division, or any larger size, would
require American approval in advance.11 The Nationalists grudgingly
accepted this, thus substantially making their maritime-oriented military
markedly more defensive than offensive. Finally, Chiang Kai-shek, having
obtained a much clearer picture of Nationalist military capability, would
never again attempt an amphibious attack on the mainland.
 BAITUAN: CHIANG’S JAPANESE MILITARY ADVISORS

With historical hindsight, it can be seen that in the early 1950s Chiang Kai-
shek was opportunistically trading the issue of a military reconquest of the
Communist mainland, thus relieving the pressure on the Korean Peninsula,
for a long-term security and defense promise from his American patrons.
While Chiang might be considered an opportunist in this regard, he was a
nationalist too. To achieve his ultimate goal of consolidating his Taiwan base
without being entirely under U.S. control, Chiang at one point counted on a
secret Japanese military unit to help train his ground forces, draft military
plans, and carry out military ideological education so as to counterbalance
the strong MAAG influence and, more significantly as it turned out, to
checkmate such Nationalist military leaders as Sun Liren, who had American
support.
Recall that, while Chiang was still struggling to defend Southwest China
in November 1949, a former Japanese officer named Tomita Naosuke was
with him and assisted the Nationalist military planning at this critical
juncture (see Chapter 5). This was by no means accidental. Earlier, in
September 1949, when Tang Enbo was making a last-ditch effort to defend
the indefensible Amoy against the PLA, he submitted a detailed proposal to
Chiang about organizing a “new army” (xin jun) as a completely trustworthy
and loyal force to serve Chiang’s anti-Communist cause. Tang’s proposal
incorporated the idea of General Cao Shicheng, a high-ranking Nationalist
officer serving in the Nationalist Chinese Mission in Tokyo, to employ
former Japanese officers to train this new army. The scale of the army,
according to Tang, was designed to be at a divisional level, consisting of
about 9,000 soldiers, 300 horses, 50 vehicles, and 1,200 “foreign
instructors.”12 Meanwhile, a liaison office should be set up in Tokyo as soon
as possible to conduct covert communications with, and recruitment of, those
Japanese ex-officers who were willing to serve in this new army and serve
Nationalist China. Each instructor would be paid $30 a month, with an
additional $20 as a travel subsidy. General Cao Shicheng would be
responsible for managing the liaison office and recruiting the instructors.13
Two months later, Tomita Naosuke, the first instructor of this kind, arrived in
Sichuan, even though the building of the planned new army remained an
empty slogan.
No “new army” such as Tang proposed was formed in the subsequent
months. However, by February 1950, with tacit consent from SCAP
headquarters, seventeen Japanese ex-officers followed Naosuke’s footsteps
and reached Taiwan surreptitiously from Yokohama via Hong Kong. These
officers, under the leadership of Naosuke, who had now taken a Chinese, Bai
Hongliang, formed a group dubbed Baituan (literally meaning “Bai’s
group”), and began their military education and training program in the
Nationalist army.14 A military officers’ training corps was soon established
at an obscure spot near Yuanshan, where the Japanese instructors launched
their program. In the months before the Korean War, this unofficial Japanese
military advisory unit played a somewhat similar role to Charles Cooke’s
STP team, at the very time when Chiang had been virtually abandoned by the
Truman administration, and when any foreign involvement in the Nationalist
military and security policy planning had to go underground, and thus was
inadvertently privatized.
The creation of Baituan, as it turned out, served an additional purpose for
Chiang. Just as Chiang might have utilized Charles Cooke and the retired
admiral’s STP team to reign in such key Nationalist military chiefs as Chen
Cheng and Zhou Zhirou, he was introducing Japanese influence to offset Sun
Liren, the all-time American favorite. In the spring of 1950, Chiang
purposely designated the 32nd Division stationed at Hukou in Hsinchu
County, which was then being viewed as the best ground force unit available
on the island, for the Baituan to train, exercise, and experiment their military
theories on. Chiang also allowed the Japanese to play a great part in planning
Nationalist social and military mobilization, a decision that bypassed Sun,
who theoretically commanded all the ground forces. Doubtlessly, Sun was
humiliated and furious.15
After the MAAG was officially instituted in the spring of 1951, the
presence of the Baituan, whose number had grown from eighteen to seventy-
six, became one of the most pressing issues General William Chase wanted
to settle with the Nationalists.16 The MAAG and the U.S. Embassy realized
Chiang’s use of the Japanese was intended to show Sun Liren and the
Nationalist armed forces under Sun’s command that he would never allow
the Americans to monopolize Taiwan’s military. It was also a reflection, as
the Americans saw it, of the “divide-and-rule” policy Chiang perennially
applied.17 Moreover, as the Americans became aware that one of the main
purposes of Baituan military training was to demonstrate that American
methods were unsuited to China politically and militarily, and that the
Nationalists could learn more from Japan than from America in the military
field, Washington saw ousting the Baituan as imperative. What made the
Baituan’s existence even more intolerable to Washington was when Sun Liren
complained to the MAAG that a large number of military commanders were
taken away from their units for three to four months to join the Baituan
training program, at a time when they were specifically needed in connection
with the MAAG effort.18
Faced with strong U.S. pressure, in July 1952 Chiang ordered the Baituan
to go underground. The training camp at Yuanshan was shut down, and its
staff reduced to about thirty. But shortly thereafter, in November, the training
program resumed in another place, Shipai, under the pretext of conducting
research.19 Amazingly enough, the relocated training corps operated quietly
for another seventeen years. It was not until early 1969 that the last four
Japanese instructors were asked to close their program and return to Japan. It
is estimated that in the almost two decades of Baituan’s existence on Taiwan,
over 10,000 higher-ranking Nationalist officers attended its training
programs.20
 THE TWIN PLANS

Until now, the historical significance of the former Japanese officers in

Chiang’s military has largely been ignored in the scholarship. One hitherto
unnoticed story about Baituan was the role it played in Chiang Kai-shek’s
secret military planning and the resultant implications for Taiwan’s relations
with the United States. In May 1953, half a year after going underground, the
Japanese military instructors drafted a lengthy and detailed proposal
regarding a Nationalist military counteroffensive against the Communist
mainland. The plan, dubbed “Guangrong” or “Guang” (literally meaning
“Glory”), advocated a five-year preparation period, after which the
Nationalists could be ready to launch independent military operations against
Communist China even in the absence of foreign aid. The main idea was for
the Nationalists to occupy and hold South China for six months as the first
step toward recovering the entire mainland or at least territories south of the
Yangtze. The Pearl River Delta was carefully picked by the Japanese experts
as the preferred target for a Nationalist amphibious landing and the creation
of a preliminary base of operations. To achieve this end, in addition to the
envisioned 1,650 fighter planes and 298,200 tons of naval ships to be
procured and developed in the years to come, the plan called for the building
of a strong Nationalist ground force, consisting of sixty divisions—fifty-two
infantry and eight cavalry. The rearmament was expected to be completed by
the spring of 1958, when, according to the plan, the Nationalists would be
able to launch their first counteroffensive against the Chinese Communists.21
Two weeks after the Guang plan was formulated, on June 11, Chiang Kai-
shek brought his top aides to Shipai, where Tomita Naosuke and his team
detailed their military proposal. Chiang was outwardly satisfied, confiding in
his diary on that day that the general direction of the plan “hit his heart well,”
and this was exactly what he had in mind.22 What made Chiang appreciate the
Guang plan was no so much its grandiose but unrealistic call for a military
recovery of the mainland, but its usefulness when he was bargaining with
Washington for more military aid. In late 1952, during the weeks following
Dwight Eisenhower’s election to the presidency, Chiang contemplated
possible strategies to deal with the new Republican administration in
Washington. Chiang was rather uncertain whether the new administration
would ask the Nationalists to contribute to the Korean War effort, either by
sending reinforcements to the peninsula or by opening a second front on the
Communist mainland so as to relieve the pressure in Korea. In the case of the
former, neither Chiang nor his close advisors saw how throwing their best
troops into the war effort would serve their regime’s best interest.23 In a
conversation with General William Chase and Karl Rankin on December 8,
1952, Chiang fretted about Taiwan’s vulnerability and expressed his
disbelief that the Seventh Fleet in its current position could provide the
much-needed air defense of the island. Chiang told the American
representatives that Taiwan’s security remained his greatest concern when it
came to the issue of dispatching Nationalist forces to join the Korean War.24
Having decided that consolidating his Taiwan powerbase was his top
priority, Chiang then came up with two crucial guidelines for dealing with
Eisenhower’s new administration. While Chiang would be willing to
contribute up to three divisions to assist the South Koreans, in return he
would seek the following two crucial promises from Washington: the signing
of a mutual security pact and the continuation of military aid regardless of
how the situation in Korea evolved.25 As the cease-fire on the Korean
Peninsula became a reality toward the middle of 1953, Chiang’s concern
about the future position of the Taiwan-based Nationalist government grew
more apparent. In early June, in a meeting in Taipei with Admiral Arthur
Radford, Chiang decided to test the American reaction by claiming to want to
launch a “unilateral” counteroffensive against the mainland. Radford
responded by proposing the creation of a “joint” command structure that
would restrict any unilateral military actions. Without hesitation, Chiang
immediately agreed that the United States should lead such a joint command
if it were created.26 Later on, in late July, concerned that Taiwan’s geo-
strategic value might be undermined by the forthcoming armistice in Korea,
Chiang decided he would either urge continued U.S. military aid under the
pretense of retaking the mainland or lodge an official request to Washington
for signing a mutual defense pact.27
For reasons not difficult to understand, namely, to maintain his supreme
leadership as Free China’s only hope of reconquering the Communist
mainland, Chiang decided to take the first option. On December 28, taking
advantage of Arthur Radford’s short stopover in Taipei, Chiang handed over
a detailed plan codenamed “Kai” for the admiral’s perusal. The new
program, a reincarnation of Baituan’s Guang program, aimed at building and
training a total of sixty divisions of Nationalist ground forces within three to
four years, to be used to regain South China, and to divert and tie down
Chinese Communist divisions that could otherwise be engaged in, say,
Indochina. Deliberately spooking the Americans with the plan’s
extraordinary scale and budget ($1.3 billion in total), a shrewd Chiang
immediately proposed an alternative for Washington to consider: Taipei
would reduce the number of required divisions from sixty to forty-one, and
shorten the period of training and preparation envisaged from the original
three to four years to about eighteen months. As Chiang explained, this would
hugely reduce the cost while swiftly enhancing Nationalist military
capability, with which Taiwan could contribute to the anti-communist cause
in the Far East.28 Unprepared for this “Kai” Plan that Chiang had so
unexpectedly presented, an outwardly lukewarm Radford was willing to
accept it only after making it clear to Chiang that he did so solely in a private
capacity, a move that caused Chiang to feel humiliated.29
The “Kai” plan received a rather negative response from the United
States. MAAG, then in the process of reforming the Nationalist military
establishment and reorganizing its forces, felt that much of the plan was
“completely infeasible of execution” and that nearly every aspect of it would
require vast augmentation to meet U.S. standards. In a political sense, as the
plan called for recruiting at least 300,000 local Taiwanese reserve
personnel, General Chase doubted whether these islanders would support
combat operations on the mainland. From a purely practical point of view,
Chase analyzed that the Nationalists simply showed no appreciation of the
logistical base needed to support the training or deployment of a fighting
force capable of gaining a foothold on the mainland.30
U.S. Embassy personnel in Taipei also viewed the plan as beyond the
scope of the existing mutual security program. Nevertheless, Karl Rankin in
quite a sympathetic tone argued that the Kai plan revealed the differences
between Nationalist and American policy. As Rankin perceived, not quite
precisely though, while Chiang Kai-shek was dedicated to the liberation of
the mainland, the United States had undertaken no commitment either to
support him in this purpose by using American forces or to provide Chiang
with arms and equipment beyond what might be needed for the defense of
Taiwan.31 In Washington, planning-level officials at the State Department
generally believed that the submission of the Kai plan had successfully
caused the United States to take a new look at the aid program from the
standpoint of maximum utilization of the Nationalist Chinese potential,
instead of the usual standpoint of the strategic reserve concept. Their
conclusion was that, in the long run, U.S-favored limits on the Nationalist
forces’ offensive capabilities would become utterly unacceptable to
Taipei.32
Still, many doubted whether Chiang Kai-shek genuinely believed he could
launch a successful military operation against Communist China.
Notwithstanding the impracticability with which it was perceived, the Kai
plan did increase Taipei’s bargaining position in its dealings with
Washington, bringing about a reconsideration of U.S. military policy toward
the island-based Nationalists after the Korean cease-fire. In mid-March
1954, in a session between top Nationalist officials and U.S. representatives
in Taipei, with the Kai plan still in abeyance, Chiang successfully persuaded
MAAG to temporarily accept that the total number of Nationalist infantry
divisions on the island should be twenty-four, rather than the twenty-one
MAAG had initially proposed. Chiang was also able to secure MAAG’s
promise to keep intact the additional 7 divisions and total of 15,000
irregulars then deployed on the offshore islands.33
Chiang knew there was no realistic hope of launching a “mainland
counteroffensive,” but used the idea primarily to achieve other goals. So it is
not surprising that he would modify its concept to suit Taiwan’s other
diplomatic and military-strategic purposes. To secure continued military aid
from the United States, in the spring of 1954 Chiang shifted from his original
stance to favoring the recovering Hainan Island and the Leizhou Peninsula
opposite Hainan. He understood that their geographical proximity to
Indochina was of considerable security interest to the United States.34 On
April 7, President Eisenhower publicly opposed a negotiated settlement to
end the war in Indochina between the French and the Vietminh on the grounds
that it would lead to a Communist-controlled Vietnam and a “falling row of
dominoes” in Southeast Asia. After the fall of the French garrison at Dien
Bien Phu on May 7, military analysts in the CIA wrestled with the question of
deeper U.S. intervention to support France. At one point, key elements in the
Eisenhower administration, including Vice President Richard Nixon,
Secretary of State John Foster Dulles, and Defense Secretary Charles E.
Wilson urged the use of nuclear weapons against Ho Chi Minh.35
On May 13, when Eisenhower’s special envoys, General James Van Fleet
and Assistant Secretary of Defense Wilfred McNeil, visited Taipei,
speculation was circulating as to the chief purpose of their visit. The British
were specifically wary of the alleged formation of a northeast Asia defense
organization, encompassing not only Taiwan, but also Hong Kong.36 As it
turned out, Chiang made efforts to push for the Kai plan and retaking Hainan.
Chiang claimed that he had changed his attitude toward the Hainan operation.
Instead of arguing that reconquering the Communist-occupied Hainan would
damage the morale and cost the Nationalists dearly, which was what he had
said two years earlier, Chiang now claimed that, with U.S. assistance, it
would not be too difficult for the Nationalists to occupy the Leizhou
Peninsula and to recover Hainan, goals that would be of great help in solving
the Indochina issue. Given an increasingly complex diplomatic and military
landscape in East Asia, with Mao Zedong’s government visibly active, the
American visitors responded with little more than a polite thank-you.37
 THE OFFSHORE ISLAND CRISIS AND THE TREATY

After this tepid response from the United States, a concerned Chiang Kai-
shek turned his focus to the second option, the signing of a defense treaty with
Washington. In March 1953, shortly after Eisenhower was sworn in,
Nationalist Chinese ambassador Wellington Koo first broached the subject in
his meeting with the new secretary of state. Although John Foster Dulles
welcomed the idea of a general pact of mutual security for Asia, he
nevertheless had reservations about forging a bilateral treaty with Taipei,
especially whether the KMT-held offshore islands should be included in such
a treaty. In a nutshell, Dulles saw that the exclusion of offshore islands would
impair the prestige of the Nationalist government, whereas their inclusion
would entail a responsibility that the United States was not as yet ready to
assume.38 The State Department’s cold response toward Taipei’s initial
request about the defense pact might also explain why Chiang chose the
rearmament of his forces, embodied in the Kai plan, as the priority strategy to
deal with the new Republican administration in Washington.
The signing of the U.S.-South Korean Security Treaty in October 1953
seemed to rekindle momentarily Taiwan’s interest in obtaining a similar pact.
But at that moment Chiang was still endeavoring to persuade Washington to
accept the Kai Plan and the professed counteroffensive initiative. On October
1, when Chiang Ching-kuo met with Dulles in Washington, the
Generalissimo’s son did not hesitate to stress the need for increasing the U.S.
military and economic assistance to Taiwan, ideally from $70 million to over
$81 million.39 Meanwhile, from Washington’s point of view, any
announcement of the conclusion of a security treaty with Taiwan before the
convention of the Geneva Conference on April 26, 1954 would not be
palatable to its allies, Britain and France. Thus, in the first few months of
1954 the Eisenhower administration decided to shelve any discussions
between Taipei and Washington about the issue for the time being.40
 A very different landscape emerged in the summer of 1954 when Chiang
was about to run out of patience with Washington as a result of its continued
shunning of his rearmament program. On June 21, finally realizing that no
massive military aid as imagined in the Kai plan would be forthcoming,
Chiang dismissed Sun Liren as commander-in-chief of the Nationalist ground
forces. It was a gesture full of political implications. As Chiang put it in his
personal diary, he no longer deemed Sun useful as a liaison for acquiring
U.S. aid.41 A week later, on June 28, in a meeting with Karl Rankin, Chiang
formally expressed his desire to sign a mutual defense pact with the United
States. To eliminate concerns that he would take unilateral counteroffensive
operations against the mainland, thus risk embroiling the United States in a
war with China, Chiang pledged that, after the treaty was concluded, he
would obtain U.S. permission before taking any military action.42
Chiang’s appeal, again, was received very negatively within the State
Department. Walter Robertson, assistant secretary of state for Far Eastern
affairs, pressured Dulles for a treaty with Taipei, which he argued would
serve to maintain the current status of Taiwan against Communist China. His
argument, however, was met with strong opposition from almost every corner
of the Department, whose chiefs were largely concerned that such a treaty
could only increase the misgivings of countries of the Third World that
recognized Beijing as the legitimate government of China. It would, for
example, antagonize India and might drive it closer to Communist China.
Ultimately, the opposition view got the upper hand. Thus, on September 1,
1954, before John Foster Dulles departed for the Philippines to join the
Manila Conference to found the Southeast Asia Treaty Organization
(SEATO), he decided to delay setting a date for the treaty negotiations with
Taiwan, because, again, of the complexities of the offshore island problem.43
The Chinese Communists, ironically and unwittingly, contributed to the
final conclusion of a mutual security pact between Taipei and Washington.
Beginning on September 3, the PLA launched a massive shelling attack on
Quemoy. The Nationalists retaliated by bombing the Communist military
infrastructure in Amoy.44 At one point, the offshore crisis escalated to such a
pronounced extent that the Taiwan Strait was deemed likely to become the
Cold War’s next theater. The timing of the Quemoy bombardment was
deliberate, as it coincided with Dulles’s arrival in Manila, and Mao Zedong
intended the action to forestall extending the protection of the SEATO to
Taiwan.45 Such a calculated action, however, provided Chiang Kai-shek with
perfect justification to push Washington toward the desired defense treaty. On
September 9, during Dulles’s five-hour stopover in Taipei on his way back to
the United States, Chiang emphasized the importance of finalizing a bilateral
pact. Chiang refuted the argument that Taiwan should not have a defense
treaty because the situation was “fluid” by stating that the “fluid” situation
was caused exactly by the absence of such a pact. Uncommitted, Dulles
nevertheless assured Chiang that he valued what Chiang had said and that “it
had not fallen on barren ground.”46
The secretary of state’s short visit was widely seen as an important sign
of U.S. support for the Nationalists, and it increased Chiang Kai-shek’s
confidence in handling the Quemoy crisis. On the day after the departure of
Dulles, Chiang went on a retreat with his family to Sun Moon Lake. Realizing
that the situation was turning favorable for him, Chiang wrote in his diary that
he felt relaxed, cheerful, and invigorated.47 More importantly, Chiang seemed
to get a sense of how to maneuver the Quemoy crisis and play a double game
with the Americans. A few days after returning from his restful retreat in
central Taiwan, Chiang met with Karl Rankin and General William Chase in
Taipei. Displaying great impatience and irritation, Chiang bitterly
complained that no support from the United States for an increase over the
existing Nationalist military strength levels was evident. He said he was
deeply disappointed, telling them that when Korea or Indochina was
attacked, American aid was immediately stepped up, but when the
Nationalist government was fighting a fierce war that was threatening the
Free World, the United States seemed “indifferent.” In the end, Chiang
insisted that his concerns be conveyed to the Joint Chiefs of Staff.48
Taipei’s growing show of impatience began paying dividends. In
Washington, in the face of the Communist bombardment of Quemoy, which
John Foster Dulles described as “a horrible dilemma,” the majority of the
Joint Chiefs of Staff now hardened their stance, viewing the retention of the
Nationalist-held offshore islands of very great importance, and recommended
the use of U.S. armed forces, if needed, to prevent a Communist seizure of
them.49 Nonetheless, dissenting voices remained. Defense Secretary Charles
Wilson, for instance, fretted that American intervention could involve
Washington in a Chinese civil war, and the defense of the offshore islands
would come closer to war with China than if the United States had tried to
save Dien Bien Phu.50 To solve this dilemma, Dulles planned to present the
offshore island question to the UN Security Council, where Washington
would seek an injunction against changing the status quo on the ground that
the Communist action was a threat to world peace. Dulles was convinced
that a United Nations-arranged ceasefire would secure support from
America’s Western allies, preserve the offshore islands for Taipei, and avoid
a war between Washington and Beijing. In mid-September 1954, London was
informed of the UN plan, now codenamed “Oracle,” to be broached by New
Zealand. Whitehall welcomed this proposal with the hope that it would lead
to a wider settlement of the Taiwan issue, including American recognition of
the PRC and its admission into the United Nations.51
10.1 A house on the island of Quemoy wrecked by Communist Chinese shells during the first offshore
island crisis, ca. September 1954. (Courtesy of the KMT Party History Institute)

In the midst of the Quemoy crisis, in his report back to Whitehall, the
British consul in Tamsui, A. H. B. Hermann, observed that when the shelling
around Quemoy died down toward the end of September and tension abroad
abated, apprehension of an invasion of Taiwan itself seemed oddly enough to
become more marked in Nationalist circles.52 If the British representative on
the island was smart enough to see through Chiang Kai-shek’s tactics,
Chiang’s supporters on Capitol Hill were apparently not. Throughout the
crisis, pro-Taiwan senators and congressmen in Washington had been
clamoring for a strong policy toward Beijing. Meanwhile, with the proposal
of Oracle, key figures within the administration, such as Admiral Arthur
Radford and Walter Robertson, tended to agree to it, chiefly in the belief that
the resolution would ultimately create a situation that would lay the
groundwork for UN acceptance of American assistance to the Nationalists in
holding the offshore islands.53
Anticipating that the Nationalists would consider Oracle as yet another
Yalta by which they were to be sold down the river as a result of secret
bargains made behind their backs, Karl Rankin urged Washington to take
other offsetting steps for the sake of demonstrating U.S. determination to help
defend Free China. Rankin’s suggestion was soon incorporated into a long
memorandum, dated October 7, 1954, prepared by Walter Robertson for
Dulles, in which Robertson emphasized that the time had come for an
immediate conclusion of a security treaty with Taipei. As Robertson saw it,
such a mutual defense pact was not only an essential move to offset the
negative effects of Oracle in the United Nations, but was also the best means
of deterring a Communist attack against Taiwan. As to the difficult question
of the Chinese territory to be covered by the treaty, Robertson argued that it
should precisely reflect the existing situation as to U.S. military commitments
to the Nationalist government in Taiwan, which would neither extend present
U.S. military commitments nor reduce them.54
Dulles decided to begin the treaty discussions with Taipei the very next
day, after he got a green light from President Eisenhower, who insisted that
Chiang Kai-shek should assume a more passive posture and accept a truly
defensive treaty. In other words, both Eisenhower and Dulles now viewed
the treaty as a way to rein in Chiang and his regime.55 There were also
practical reasons for signing a treaty. An official alliance with the Nationalist
government would provide an important legal basis for the U.S. acquisition
and operation of military bases and installations on Taiwanese soil. It might
also provide a stable framework within which the programs designed to
enhance Taiwan’s military and economy could go forward. The signing of a
defense pact with Taipei, moreover, might be followed by the prospective
placement of U.S. land, air, and sea forces on Taiwan, and an exclusive U.S.
control over the island’s military sites, the result of which would be a further
strengthening of American position in the Cold War’s East Asian theatre.56

10.2 Chiang Kai-shek inspects the island of Quemoy, ca. 1954. The first offshore island crisis
contributed unwittingly to a mutual defense pact between Taipei and Washington, which led to legalizing
an islands-rooted Nationalist Chinese state. (Courtesy of the KMT Party History Institute)

Back in Taipei, Chiang and his top officials were kept totally in the dark
about Oracle and the U.S. decision to begin treaty negotiations. On the
evening of October 12, when the flight carrying Robertson arrived in Taiwan,
Chiang was still in the midst of his retreat outside Taipei.57 The following
day, in a three-round discussion packed into twenty-four hours, Chiang fully
demonstrated his opportunist-cum-nationalist nature in dealing with his
American patrons. He first objected vigorously to the Oracle scheme to be
presented by New Zealand in the United Nations, deeming such a move
detrimental to the morale of his people and government. The
internationalization of cross-Strait issues was the last thing Chiang wanted.
Chiang then exclaimed that he had ordered his troops on the offshore islands
to fight to the last man, with or without U.S. assistance. When Robertson
stated that Oracle combined with a mutual defense pact would surely
improve the position of Nationalist China, an alert Chiang immediately
caught the message and changed his tune. He replied that the prospect of a
defense pact would definitely have a bearing on his evaluation of the UN
scheme. If implementing Oracle was inevitable, Chiang urged that a formal
announcement of an intention by Washington and Taipei to negotiate a defense
pact should precede the New Zealand move so that any harmful effects of
Oracle could be mitigated.58
A week later, George Yeh, Chiang’s foreign minister, was in Washington
for the treaty discussion with his counterparts from the State Department. The
Communist bombardment of the Dachens off Zhejiang on November 1, and
the resultant issues surrounding the Nationalist withdrawal from these
offshore outposts and the hitherto undecided U.S. responsibilities and roles
in defending the islands, all made the conclusion of a defense treaty urgent
and opportune.59 During the lengthy process of negotiation, three things
emerged as the main points of contention between the two sides, over which
Washington ultimately got the upper hand.
The first was the definition of the territorial scope of U.S. military
commitments in the treaty. George Yeh tried to avoid specifying only Taiwan
and the Pescadores so as to avoid giving the impression that the Nationalist
territory was limited to these two island regions and did not include the
mainland. Dulles refused to consent. He was only willing to state that the
treaty would be “applicable to such other territories [than Taiwan and the
Pescadores] as may be determined by mutual agreement.”60 Yeh conceded,
after obtaining approval from Chiang Kai-shek, who actually did not mind
much about the wording and instead was satisfied overall with the terms
proposed by Dulles.61
The second point was the limitation of Nationalist military operations. To
underscore that the pact provided for a Nationalist military that was purely
defensive, the State Department insisted that, without mutual consent, the
Nationalists would not take any offensive action that might provoke
retaliation by the Chinese Communists. George Yeh argued that, for
psychological reasons, Chiang Kai-shek had consistently tried to avoid
subscribing to any public statement committing him not to retake the mainland
or take part in an anti-Communist campaign without U.S. approval. The
Chinese people in Taiwan were not prepared for an open renunciation of the
nominal right of the Nationalist government to liberate the mainland; and it
would be difficult to present a surrender of Nationalist independence of
action in a form acceptable to the Chinese people. As the State Department
continued to hold its ground, Taipei again backed down, only requesting that
the provision be made secret so as not to cause any damage to the morale of
Free China.62
The third point of disagreement in the treaty negotiations concerned the
restriction on the disposition of Nationalist forces within the KMT-controlled
territory. The State Department insisted that the United States should have
some voice about Nationalist military deployment. In other words, without a
joint arrangement, the bulk of Nationalist forces might be stationed on the
offshore islands, thus creating a serious problem for the United States in its
commitment to the defense of Taiwan. Taipei defended its position by
arguing that this issue was hypothetical and would be inconceivable in
practice, and the restrictions on the movement of troops to the offshore
islands would make it possible for the Nationalists to be assured of their
right of self-defense on the offshore islands. Nevertheless, the State
Department held its ground.63 In the end, Chiang maintained that an early
conclusion of the mutual defense pact was more imperative than renegotiating
the critical terms imposed by the United States.64 Both sides then agreed to
rephrase the wording which stated that the forces deployed on Taiwan and
the Pescadores should not be reduced “to a degree which would substantially
diminish the defensibility of such territories.” Adding to this proviso was
Washington’s stern refusal to guarantee “full logistic support” of the
Nationalist forces stationed on the offshore islands.65 Again, the Nationalists
had no option but to agree.
On December 2, 1954, the mutual defense treaty between the United States
and Nationalist China was signed by Dulles and Yeh. By deliberately not
mentioning the offshore islands in the main text, Washington hoped to deter
Beijing from attacking Chiang Kai-shek’s position there and at the same time
to discourage Chiang from using the islands as a stepping-stone to invasion
of the mainland. The reaction from the Nationalist upper echelons was
mixed. Psychologically, the treaty freed Taipei from the embarrassing
position of not having a defense pact, while the United States had concluded
such treaties with Japan, South Korea, the Philippines, and other countries in
East Asia. The treaty was also concrete proof of U.S. determination to
continue recognition of Taipei, thus easing fears that British pressure might
eventually encourage Washington to recognize Beijing or to accept the idea
of placing Taiwan under UN trusteeship. However, as Karl Rankin observed,
the treaty also invited critical comments among the highest Nationalist
echelons on such sensitive questions as the eventual liberation of the Chinese
mainland and the protection of the offshore islands.66
Those who raised these doubts might not have realized that the result was
what Chiang Kai-shek had planned. Chiang, writing in his diary on the day
the treaty was signed, December 2, 1954, deemed the treaty a marvelous
achievement considering the disgrace and insults he had endured over the
previous decade, as well as the bitter struggle for his very survival since
1949, the year the Communists took over the Chinese mainland. His
gratification lay not so much in the fact that an elevated Nationalist military
strength could be expected but in the fact that Taiwan, his last power redoubt,
was now finally secured.67 True, Chiang had gotten what he wanted, a mutual
defense alliance with the United States, but the alliance not only confined
Nationalist jurisdiction to Taiwan and the Pescadores, but it also essentially
shattered any real hope of Chiang’s military recovery of the mainland.
Indeed, with the defense treaty, and the now deeply-rooted MAAG influence
over the Nationalist military and security policy planning on Taiwan, any
subsequent ideas or attempts by the Nationalists to resort to military means to
topple the Communist regime and recover China would prove to be no more
than fantasy.
 Conclusion

ON NOVEMBER 25, 1954, a week before the mutual defense treaty between
Taipei and Washington was signed, Chiang Kai-shek established the Planning
Commission for the Recovery of the Mainland, to be chaired by his vice
president, Chen Cheng. When addressing the commission members at its
inauguration ceremony, Chiang emphasized that the consolidation of the
Taiwan power base had become crucial in influencing and transforming the
Communist mainland. Chiang stressed the necessity of cultivating Taiwan’s
cultural, social, economic, and educational assets, in what would later
become known as “soft power,” to be used one day instead of military force
to overthrow the Communist regime on the mainland.1 At this point, Chiang
might have already sensed that the price of a mutual defense alliance with the
United States would be a permanent Nationalist China based on Taiwan and
the Pescadores, and not on the mainland. He therefore began promoting the
island redoubt as the new center for the preservation of traditional Chinese
civilization, and the model of Nationalist governance in Taiwan as the
blueprint for the mainland’s future.2
A Nationalist China based in Taiwan and separate from the mainland
seemed to be exactly what top policy designers in Washington at this juncture
had in mind. In November 1954, the Chinese Communists dispatched
warships, motor junks, and yard patrols first to assault the Dachens off
Zhejiang Province and then to the tiny, isolated Wuqiu isle in between
Quemoy and Matsu. On the evening of November 14, the PLA torpedoed and
sank one Nationalist destroyer escort near the Dachens. It was the first
positive indication of the Communist ability to use torpedoes in night work.
The consequence, as the Americans quickly realized, was “a reduced
reluctance” of the PLA to conduct sea warfare in waters theoretically under
Nationalist control. It would be especially significant if the Chinese
Communists were aware of the presence of the Seventh Fleet in that area.3
The American military and intelligence chiefs further concluded that, while
no evidence suggested that the PLA submarines were operating outside the
Yellow Sea, the “state of training of crews [was] considered sufficiently
advanced to permit offensive operations should the Chinese Communists so
decide.”4 If the United States wanted to avoid a genuine military clash with
the PRC, the withdrawal of the Nationalist troops on the offshore islands
seemed inevitable.
On January 10, 1955, Mao Zedong again ordered the PLA to mount a
massive attack on the Dachens. Eight days later, about 10,000 PLA troops
launched a successful air, amphibious, and land operation to occupy
Yijiangshan, approximately nine miles north of the Upper Dachen, inflicting
heavy casualties on the approximately 1,000 Nationalist defenders on the
islet. In the face of the renewed Taiwan Strait crisis, John Foster Dulles
proposed a U.S.-assisted evacuation of all the Nationalist-held offshore
islands except Quemoy (and later, Matsu) in combination with a defensive
commitment for the latter. Despite some strenuous objections from his
national security advisors, President Eisenhower stood firmly behind
Dulles’s idea.5
In Taipei, a pragmatically minded Chiang Kai-shek saw no reason to
reject Dulles’s proposal. Abandoning the Dachens, the last territorial hold of
his home province, was certainly distasteful, but Chiang was aware of their
vulnerability and their marginal value as Taiwan’s defensive outposts. In
addition, as his diaries reveal, Chiang reckoned that their loss was part of a
tacit quid pro quo without which Taipei could not count on American
assistance to protect the more strategic Quemoy and Matsu. More
significantly, Chiang worried that refusing to accept the proposal would
generate a very negative impression at the very time Congress was in the
process of ratifying the Mutual Security Treaty he had already negotiated.6
With Chiang on board, President Eisenhower delivered his message to
Congress on January 24, now called the Formosa Resolution. Delegating the
president to employ U.S. armed forces to defend Taiwan and the Pescadores,
the final resolution provided the authority for the “securing and protection of
such related positions and territories of that area now in friendly hands” and
the taking of such other measures as the president would judge to be required
or appropriate in assuring the defense of Taiwan and the Pescadores.
Congress approved the resolution the next day; and on February 9, it also
ratified the Mutual Security Treaty.7 Chiang was bitterly disappointed about
the deliberate omission of Quemoy and Matsu in the resolution; but, except
for the grumblings in his diaries over the negligence of his “idle and
incapable” foreign affairs officials, Chiang made no move to pursue the issue
with Washington. Instead, privately Chiang deemed the passing of the
resolution on Capitol Hill a blessing for the fate of his nation—something
which brought him much comfort and satisfaction.8
Conceivably, both the Mutual Security Treaty and the Formosa Resolution
served as a two-edge sword to the Nationalists’ military and defense policy
formulation. With the professed U.S. commitment, their territorial base was
certainly made more secure against Communist encroachment. Yet, an
inevitable corollary of the treaty and resolution was that Taipei’s military
capability would henceforth be purely defensive in nature, and would be
substantially restricted in scope by its American ally, with little probability
of stretching beyond the island territories the Nationalists now claimed as the
Republic of China. When meeting with John Foster Dulles in Taipei in early
March 1955, Chiang Kai-shek assured the secretary of state that he would
take no independent action insofar as the use of military force was
concerned, and would undertake no large-scale military operations against
the mainland without full consultation with Washington. Plainly and without
embarrassment, Chiang told Dulles that the only problem he could foresee
was how to publicly handle these matters in order to bolster morale and keep
alive the hope that the Nationalists would one day return to the mainland.9
In the following decade, despite the U.S.-Taiwan defense treaty, the desire
by Chiang Kai-shek and his government to launch a military counterattack
never really evaporated. This underlying attitude was first demonstrated in
the years before the second offshore island crisis of 1958, and then again
revealed in the development of a series of secret plans for a military
reconquest of the mainland in the early 1960s, the details of which have
become disclosed in recent years.10
Between 1956 and 1957, Chiang steadily deployed his best troops to
Quemoy and Matsu. Whereas in September 1954, there were 30,000
Nationalist soldiers stationed on the two offshore island groups, by April
1956, the island garrisons totaled nearly 100,000 men, along with more than
a third of the major military equipment available to Nationalist ground
forces.11 Many American leaders at the time perceived these military
deployments as Chiang’s attempt to draw the United States into a war with
Communist China. When the PLA bombarded Quemoy and Matsu in August
1958, and tension mounted in the Taiwan Strait once again, Chiang rejected
the renewed U.S. call to withdraw some of his forces from the offshore
islands. Instead, Chiang warned the Eisenhower administration that unless
Nationalist forces were permitted to take aggressive action on an extensive
scale, Quemoy, along with one-third of Taiwan’s army, would be lost.12
Such a hawkish stance during the 1958 crisis partly resulted in America’s
determination to distance itself from Nationalist actions when the tension in
the Taiwan Strait began to subside. A joint communiqué issued on October
23, 1958, at the conclusion of John Foster Dulles’s visit to Taipei, forced
Chiang to declare that his government would henceforth depend on political
means, rather than military force, to recover the Chinese mainland. Chiang
was forced to accept the principle of an appreciable reduction of armed
forces on Quemoy and Matsu.13 Washington had become so concerned about
what it perceived as Nationalist efforts to embroil the United States in a war
with the PRC that Defense Secretary Neil McElroy at one point proposed
sponsoring a coup against Chiang to bring to power someone willing to
evacuate the offshore islands.14 In the same way, Chiang Kai-shek was
extremely uneasy and unhappy about having to compromise with Dulles’s
request that his government limit itself to political rather than military means
to recover the mainland. And yet in his private diaries a no-less-stubborn
Chiang had to reckon that such a conciliatory approach was the only policy
now available to him.15 After all, Chiang was not only a nationalist and
perhaps an opportunist, but also a pragmatist.
If Chiang Kai-shek was happy about securing his island Chinese state in
the mid-1950s, by the early 1960s his desire, even determination, to return to
the mainland apparently revived as a result of the failure of Mao Zedong’s
Great Leap Forward and the resultant economic chaos in China. As
manifested in new historical evidence, Chiang thought that his moment had
come and once again contemplated counterattack seriously.16 That this did
not come to pass is largely due to the constraints imposed by the military and
diplomatic framework created by the Americans in the mid-1950s. It may be
reasonable to argue that, after the mid-1950s, the creation of a Nationalist
Chinese state on Taiwan did not end but continued, involving still more
actions and inactions, political maneuvering and contingencies, a virgin field
that deserves further scholarly investigations.
When Chiang Kai-shek died in April 1975, his political will urged his
fellow Nationalists and the people on the island to carry out the restoration
of the Chinese mainland and reunify the Republican Chinese nation.
Nevertheless, for more than two decades, neither his son Ching-kuo nor other
KMT leaders were able to achieve the dream. Two regimes, each claiming to
be the sole legitimate central government representing all of China, remained
separated by the Taiwan Strait, as it had been since December 1949.
 We have become complacent about the divided China issue, forgetting the
less-told and yet significant historical fact that this state of affairs itself was
never been intended. This book begins with the Cairo Conference in the fall
of 1943, when Nationalist China and the United States were wartime allies
against the Axis powers. It now ends with the signing of a mutual defense
pact between Taipei and Washington in late 1954, when the island-rooted
Nationalist state officially realigned itself with the United States, and when
Taiwan took its permanent form as the Nationalist Chinese center.
Within a little more than a decade, from the early 1940s to the mid-1950s,
the making of Nationalist China in Taiwan was a process involving political
complications and contingencies, policy planning and maneuvering, actions
and inactions, and historical ironies. It was a process that no one could have
foreseen when the fate of Taiwan and the Pescadores was originally
contemplated on both sides of the Pacific, during World War II. To many
Americans as well as Chinese, it was perhaps also surprising that no one in
the Washington administration, from Franklin D. Roosevelt through Harry
Truman and Dwight Eisenhower, could have expected to become involved,
whether intentionally or unwittingly. The formation of the accidental island
state on Taiwan, separate from the Chinese mainland, was the outcome of
many ad hoc and unique factors, decisions, and even serendipity, as well as
an accumulation of various internal contentions within the Nationalist camp,
the KMT-CCP civil war, and political struggles intersected with the broader
geostrategic concerns of world powers.
As this book has indicated, the investigation into how an accidental island
state in Taiwan came to be has unearthed several little-known historical
events and produced new interpretations. A long-forgotten foreign policy
choice and the resultant political actions on the part of the United States
toward post-World War II China, envisioning a gradually divided and
regionalized China, strengthened Taiwan’s political identity and
distinguished it from the mainland. The negligent role obliquely played by
George Kerr in the events surrounding the February 28 incident of 1947
helped promote a political-economic setup on Taiwan that would lead to the
creation of an unintended state years later. For a time surrounding the
outbreak of the Korean War, the biggest contingency in the period covered by
this book, the U.S. policy toward the Nationalists headed underground and
was considerably privatized. We now know that Charles M. Cooke and his
unofficial advisory group helped prolong the ailing Nationalist regime’s
survival in Taiwan. It was the KMT’s preliminary reform imposed in the
aftermath of the 1947 tragedy, and then a series of intentional and somewhat
inglorious political/national security measures undertaken in the early 1950s
to consolidate its rule and reinforce its legitimacy, that laid the foundation for
the Nationalist state in Taiwan. Finally, it was Chiang Kai-shek who, at
every critical juncture in an extremely fluid and uncertain situation, made
decisions that would translate into institutional arrangements and eventually
lead to the accidental formation of an island state, his last territorial refuge.
While the thaw in the China-Taiwan relationship has become one of the
most salient developments in East Asia’s international politics in the first
decade of the twenty-first century, the time is opportune to explore how such
a cross-Strait division originated, how the Nationalist state was created on
the island of Taiwan, and how the United States played its part in the process
of this state construction. It is hoped that this book has gone a considerable
way in answering some of these important questions.
Glossary of Names and Terms

Notes

Bibliography

Acknowledgments

Index
 Glossary of Names and Terms

Bai Chongxi 白崇禧

Bai Hongliang 白鴻亮
banshan ren 半山人
Cao Shicheng 曹士澂
Chang Kia-ngau 張嘉璈
Chen Cheng 陳誠
Chen Jitang 陳濟棠
Chen Lifu 陳立夫
Chen Yi 陳儀
Cheng Qian 程潛
Chiang Ching-kuo 蔣經國
Chiang Kai-shek 蔣介石
Dai Li 戴笠
De Wang (Prince Demchugdongrob) 德王
fabi 法幣
Feng Baiju 馮白駒
Formosa League for Re-emancipation 台灣再解放聯盟
Fu Jingbo 傅涇波
Fu Zuoyi 傅作義
Gan Jiehou 甘介侯
Gui Yongqing 桂永清
Hu Shi 胡適
Hu Weida 胡維達
Hu Zongnan 胡宗南
Huang Chaoqin 黃朝琴
Huang Jie 黃杰
Peter Huang (Huang Jinan) 黃紀男
Jiang Biao 江杓
Ke Taishan 柯台山
Ke Yuanfen 柯遠芬
V. K. Wellington Koo (Gu Weijun) 顧維鈞
leduo youshao 樂多憂少
Li Jishen 李濟深
Li Mi 李彌
Li Peiji 李培基
Li Zonghuang 李宗黃
Li Zongren 李宗仁
Thomas Liao (Liao Wenyi) 廖文毅
Lin Biao 林彪
Lin Dingli 林頂立
Lin Shaonan 林紹楠
Lin Xiantang 林獻堂
Long Yun 龍雲
Lu Daoyuan 魯道源
Lu Han 盧漢
Ma Bufang 馬步芳
Ma Chengxiang 馬呈祥
Ma Jiyuan 馬繼援
Ma Hongkui 馬鴻逵
Mao Bangchu 毛邦初
Mao Zedong 毛澤東
nuhua 奴化
Peng Dehuai 彭德懷
Peng Mengqi 彭孟緝
Qiu Changwei 邱昌渭
Qiu Niantai 丘念台
qu fenbu 區分部
Radreng Hutuktu 熱振呼圖克圖
Ren Xianqun 任顯群
Shao Yulin 邵毓麟
su jian 肅奸
Sun Fo (Sun Ke) 孫科
Sun Liren 孫立人
T. V. Soong 宋子文
Taiwan Geming Tongmenghui 台灣革命同盟會
Taktra Rimpoche 達札仁波切
Tanaka Giichi 田中義一
Tang Enbo 湯恩伯
Tang Zong 唐縱
Tomita Naosuke 富田直亮 (白鴻亮)
Tong Guanxian 童冠賢
Wei Daoming 魏道明
weiwei bu huaide 畏威不懷德
Weng Wenhao 翁文灝
Wu Guozhen (K. C. Wu) 吳國楨
Wu Sanlian 吳三連
Wu Shi 吳石
Wu Songqing 吳嵩慶
Wu Xingyong 吳興鏞
Wu Zhongxin 吳忠信
Xiang Weixuan 向惟萱
xiaozu 小組
Xie Nanguang 謝南光
xin jun 新軍
xingzheng zhangguan 行政長官
Xiong Shihui 熊式輝
Xu Chongzhi 許崇智
Xue Yue 薛岳
Yamamoto Jotaro 山本条太郎
Yang Lianggong 楊亮功
Yang Zhaojia 楊肇嘉
George Yeh (Ye Gongchao) 葉公超
yintui 引退
Yu Chengwan 余程萬
Yu Hanmou 余漢謀
Yu Hongjun 俞鴻鈞
Ziyou Zhongguo Laogong Tongmeng 自由中國勞工同盟
Zhang Fakui 張發奎
Zhang Qiyun 張其昀
Zhang Qun 張群
Zhang Zhizhong 張治中
Zheng Jiemin 鄭介民
Zheng Xue Xi 政學系
Zhongguo Minzhu Gemingdang 中國民主革命黨
Zhou Enlai 周恩來
Zhou Hongtao 周宏濤
Zhou Zhirou 周至柔
Zhu Shaoliang 朱紹良
Notes
 Abbreviations

AMFA-1 Academia Hist orica, Waijiaobu Dang’an [Archives of t he Minist ry of Foreign Affairs]
AMFA-2 Inst it ut e of Modern Hist ory Archives, Academia Sinica, Waijiaobu Dang’an [Archives of t he
Minist ry of Foreign Affairs]
CAB T he Nat ional Archives, London, Unit ed Kingdom, Cabinet Office Records
CB Academia Hist orica, Choubi [P lans and Direct ives]
CKSD Hoover Inst it ut ion Archives, Chiang Kai-shek Diaries
CRCA Hoover Inst it ut ion Archives, Zhongguo Guomindang Zhongyang Gaizao Weiyuanhui Dang’an
[Archives of t he KMT Cent ral Reform Commit t ee]
FO T he Nat ional Archives, London, Unit ed Kingdom, Foreign Office Records
Form osa Confidential U.S. State Departm ent Central Files: Form osa, Internal Affairs 1945–1949
1945–1949
Form osa Confidential U.S. State Departm ent Central Files: Form osa, Republic of China 1950–1954
1950–1954
GW / ZZS Academia Hist orica, Geming Wenxian. Zhengzhi: Zhengjing Zhongyao Sheshi [Revolut ionary
document s. P olit ics: Import ant P olit ical and Economic Measures]
P CKSC / Academia Hist orica, Jingguo Xiansheng Wendian Ziliao [Source mat erials relat ing t o Chiang Ching-
JXWZ kuo]
P CKSC / Academia Hist orica, Jiang Zongt ong Jiashu. Zhi Jiang Furen Shuxin [P resident Chiang Kai-shek’s
JZJ family let t ers. Correspondence wit h Madame Chiang Kai-shek]
RG U.S. Nat ional Archives and Records Administ rat ion, Record Group
TD Academia Hist orica, Tejiao Dang’an
/ DHW Waijiao. Dui Han Waijiao [Specially submit t ed archives. Foreign Affairs. Korea]
/ DMW Waijiao. Dui Mei Waijiao [Specially submit t ed archives. Foreign Affairs. Unit ed St at es]
/ FF Waijiao. Fangwen Feilubin [Specially submit t ed archives. Foreign Affairs. Visit t o t he P hilippines]
/ GQX Waijiao. Guofang Qingbao ji Xuanchuan [Specially submit t ed archives. Foreign Affairs. Nat ional
defense, int elligence, and propaganda]
/ GSJ Junshi. Guofang Sheshi Jihua [Specially submit t ed archives. Milit ary. Nat ional defense inst allat ions
and planning]
/ JMBZ Junshi. Jin-Ma ji Bianqu Zuozhan [Specially submit t ed archives. Milit ary. Operat ions in Quemoy,
Mat su, and border regions]
/ MJY Waijiao. Meiguo Junshi Yuanzhu [Specially submit t ed archives. Foreign Affairs. U.S. milit ary
assist ance]
/ MXT Waijiao. Meiguo Xiefang Taiwan [Specially submit t ed archives. Foreign Affairs. U.S. defense of
Taiwan]
/ SX Junshi. Shijian Xueshe [Specially submit t ed archives. Milit ary. T he Societ y of t he P ract ice]
/ XQG Waijiao. Xifang Qiye Gongsi [Specially submit t ed archives. Foreign Affairs. T he West ern
Ent erprises Incorporat ed]
/ XW Zhengzhi. Xizang Went i [Specially submit t ed archives. P olit ics. T ibet an issues]
/ YZ. Yiban Ziliao. Minguo Sanshijiunian [Specially submit t ed archives. General Informat ion. Year 1950]
1950
/ YZ. Yiban Ziliao. Minguo Sishinian [Specially submit t ed archives. General Informat ion. Year 1951]
1951
/ ZJBJ Junshi. Zhongyang Junshi Baogao ji Jianyi [Specially submit t ed archives. Milit ary. Milit ary report s
and proposals]
/ ZJJR Junshi. Zhongyang Junshi Jiguan Renshi [Specially submit t ed archives. Milit ary. Milit ary
organizat ions and personnel]
/ ZJS Junshi. Zuozhan Jihua ji Shefang [Specially submit t ed archives. Milit ary. Milit ary operat ions and
fort ificat ions]
/ ZJX Junshi. Zongt ong dui Junshi Xunshi [Specially submit t ed archives. Milit ary. P resident Chiang Kai-
shek’s milit ary inst ruct ions]
/ ZQJ Junshi. Zhongyang Qingbao Jiguan [Specially submit t ed archives. Milit ary. Cent ral government
int elligence apparat us]
 Introduction
1. For a general and yet somewhat simplified description about the KMT’s retreat to Taiwan, see, for
example, Jonathan D. Spence, The Search for Modern China (New York: W. W. Norton, 1990), 504–
513; Jonathan Fenby, Modern China: The Fall and Rise of a Great Power, 1850 to the Present
(New York: HarperCollins, 2008), 353–375; Michael Dillon, China: A Modern History (London: I. B.
Tauris, 2010), 259–283.
2. On the “patron-client state relationship,” see, for example, Christopher C. Shoemaker and John
Spanier, Patron-Client State Relationships: Multilateral Crises in the Nuclear Age (New York:
Praeger, 1984), 10–14; John Spanier, Games Nations Play, 7th ed. (Washington, DC: Congressional
Quarterly, 1990), 12–14.
3. See, for example, Bruce Gilley, “Not So Dire Straits: How the Finlandization of Taiwan Benefits
U.S. Security,” Foreign Affairs 89 no. 1 (2010): 44–60; Charles Glaser, “Will China’s Rise Lead to
War?” Foreign Affairs 90 no. 2 (2011): 80–91; Glaser, “Disengaging from Taiwan: Should Washington
Continue Its Alliance with Taipei?” Foreign Affairs 90 no. 4 (2011): 179–182; Nancy Bernkopf Tucker
and Bonnie Glaser, “Should the United States Abandon Taiwan?” Washington Quarterly 34 no. 4
(2011): 23–37; Shelley Rigger, “Why Giving Up Taiwan Will Not Help Us with China,” Asian Outlook
no. 3 (2011): 1–8, http://www.aei.org/publication/why-giving-up-taiwan-will-not-help-us-with-china/.
 CHAPTER 1 ▪ Taiwan in the Balance
1. China had fought with Japan since mid-1937. After the Pearl Harbor attack in December 1941,
China joined the United States, Britain, and Soviet Russia to become the “Big Four,” leading the Allied
powers.
2. Chiang Kai-shek Diaries (CKSD), diary entry for October 31, 1943, Box 43.
3. CKSD, diary entry for November 18, 1943, Box 43.
4. For a careful analysis of wartime China’s policy debates about its lost territories, see Xiaoyuan
Liu, A Partnership for Disorder: China, the United States, and their Policies for the Postwar
Disposition of the Japanese Empire, 1941–1945 (Cambridge: Cambridge University Press, 1996),
55–80.
5. CKSD, diary entry for October 3, 1921, Box 3.
6. CKSD, diary entry for March 11, 1927, Box 5.
7. See, for example, CKSD, diary entry for February 19, 1933, Box 36.
8. John F. Copper, Taiwan: Nation-State or Province? (Boulder, CO: Westview, 1999), 33–34.
9. For more about the history of the Nationalist Chinese Consulate General in Taipei, see Hsu Hsueh-
chi, “Riju Shiqi Zhonghua Minguo Taibei Zonglingshiguan, 1931–1937” [The Taipei Consulate General of
the Republic of China during the Japanese period, 1931–1937], in Riju Shiqi Taiwan shi Guoji Xueshu
Yantaohui Lunwenji [International Symposium on the history of Taiwan during the Japanese
occupation period] (Taipei: Department of History, National Taiwan University, 1993), 559–633.
10. Qin Xiaoyi, ed., Zongtong Jianggong Sixiang Yanlun Zongji [General collections of President
Chiang Kai-shek’s thoughts and speeches], vol. 15 (Taipei, Taiwan: KMT Party Historical Committee,
1984), 186–187; Hungdah Chiu, ed., China and the Question of Taiwan: Documents and Analysis
(New York: Praeger, 1973), 203.
11. For the editorial and the American analysis, see “Formosa,” April 6, 1942, National Archives and
Records Administration (NARA), Record Group (RG) 165, Records of the War Department General
and Special Staffs, Military Intelligence Division Regional Files, 1942–1944, Box 797.
12. KMT Taiwan Provincial Party Headquarters, ed., Zhongguo Guomindang Taiwansheng
Dangbu Shouren Zhurenweiyuan Weng Junming Xiansheng Jinian Tongxiang Jiemu Tekan
[Special publication for the unveiling of the commemorative statue of the first chairman of the KMT
Taiwan Provincial Party Headquarters] (Taichung, Taiwan: KMT Taiwan Provincial Party
Headquarters, 1975), 9–13.
13. Referring to Taiwan’s future status with China in June 1942, officials from the Nationalist
Ministry of Foreign Affairs only stated that the island’s return “seemed fitting to the Chinese because
the greater part of the population was Chinese and had continued to maintain close ties with China.”
See John S. Service, third secretary of the U.S. embassy in China, memorandum, June 17, 1942,
Foreign Relations of the United States (FRUS) diplomatic papers, 1942: China, 733.
14. See Office of War Information, Office of Strategic Services (OSS), “Taiwan (Formosa): Anti-
Japanese Episodes in Taiwan from 1895 to the Present,” August 22, 1944, NARA, RG 226, Records of
Office of Strategic Services, Entry 211, Box 4; J. Bruce Jacobs, “Taiwanese and the Chinese
Nationalists, 1937–1945: The Origins of Taiwan’s ‘Half-Mountain People’ (Banshan ren),” Modern
China, 16 no. 1 (1990): 99–100.
15. As Alan M. Wachman argues, the status of Taiwan was elevated from “Nationalist indifference”
to a territory that should be claimed back due to China’s geostrategic imperative during and after World
War II. See Wachman, Why Taiwan? Geostrategic Rationales for China’s Territorial Integrity
(Stanford, CA: Stanford University Press, 2007), 69–82.
16. Chiang Kai-shek, China’s Destiny (New York: Roy, 1947), 9–11.
17. See T. V. Soong, “Summary of Impressions, 1943,” personal memorandum, T. V. Soong Papers,
Hoover Institution Archives, Stanford University, Box 32.
18. George H. Kerr, Okinawa: The History of an Island People (North Clarendon, VT: Tuttle,
2000), 342–420. For more information about Qing China’s loss of Ryukyu to Japan in the 1870s, see also
Michael H. Hunt, The Making of a Special Relationship: The United States and China to 1914
(New York: Columbia University Press, 1985), 115–142.
19. Supreme National Defense Council minutes, December 20, 1943, in Qin Xiaoyi, ed., Guangfu
Taiwan zhi Chouhua yu Shouxiang Jieshou [Plans on recovering Taiwan, receiving Japanese
surrender, and taking over Taiwan] (Taipei, Taiwan: KMT Party Historical Committee, 1990), 36–38.
20. CKSD, diary entry for November 15, 1943, Box 43.
21. U.S. Department of State, Occupation of Japan: Policy and Progress (Washington, DC:
Government Printing Office, 1946), 51–52.
22. Clarence E. Gauss to Cordell Hull, December 4, 1943, FRUS 1943: China, 177–178.
23. “The United States in a New World, II: Pacific Relations,” supplement, Fortune (August 1942):
11–12.
24. Ibid. See also Liu, A Partnership for Disorder, 71–72.
25. Qin Xiaoyi, ed., Zhonghua Minguo Zhongyao Shiliao Chubian—Dui Ri Kang Zhan Shiqi
[First selection of historical materials on the Republic of China—the period of the war against Japan]
(Taipei: KMT Party Historical Committee, 1981), 3 (1), 777–778.
26. Gauss to Hull, November 5, 1942, FRUS 1942: China, 174.
27. Gauss to Hull, January 6, 1943, FRUS 1943: China, 842.
28. Gauss to Hull, January 7, 1943, FRUS 1943: China, 842–843.
29. Sumner Wells, undersecretary of state, memorandum of conversation, March 29, 1943, FRUS
1943: China, 845.
30. U.S. Office of War, “Background on Formosa,” memorandum no. S-3418, ca. 1942, United
States Office of War Information Miscellaneous Records, Hoover Institution Archives, Stanford
University, Box 1.
31. Da Gong Bao, May 15, 1943, 2.
32. See George H. Kerr, Formosa Betrayed (Boston: Houghton Mifflin, 1965), xii, 12–13.
33. Ibid., 18–19.
34. Ibid., 19.
35. Ibid.
36. Douglas J. MacEachin, The Final Months of the War with Japan: Signals Intelligence, U.S.
Invasion Planning, and the A-Bomb Decision (Washington, DC: Central Intelligence Agency, 1998),
1–5.
37. For more about the Manchurian issue during and after World War II, see, for example, Donald G.
Gillin and Ramon H. Myers, eds., Last Chance in Manchuria: The Diary of Chang Kia-ngau
(Stanford, CA: Hoover Institution Press, 1989), and John W. Garver, Chinese-Soviet Relations, 1937–
1945: The Diplomacy of Chinese Nationalism (Oxford: Oxford University Press, 1988), esp. chapter
7.
38. Research and Analysis Branch of Central Information Division, OSS, Special Report on
Formosa, January 15, 1944, NARA, RG 226, Entry 210, Box 178; U.S. Joint Strategic Services
Committee, “Strategy in the Pacific,” memorandum, February 16, 1944, RG 218, Records of the Joint
Chiefs of Staff, Geographical File 1942–1945, Entry 1, 190:1; Joint Military Transportation Committee,
“Amended Shipping Requirements for Pacific Operations,” memorandum, March 14, 1944, RG 218,
Records of the Joint Chiefs of Staff, Geographical File 1942–1945, Entry 1, 190:1.
39. U.S. Joint Intelligence Committee, “Japanese Reactions to an Operation Aimed at the Capture of
Formosa,” memorandum, March 3, 1944, NARA, RG 218, Entry 1, 190:1.
40. For a detailed discussion on American planning for Taiwan before the Japanese surrender, see
Leonard Gordon, “American Planning for Taiwan, 1942–1945,” Pacific Historical Review, 37 no. 2
(1968): 201–228.
41. U.S. Chief of Naval Operations, “Mounting an Invasion Force for Luzon-Formosa-China Area,”
memorandum, March 11, 1944, NARA, RG 218, Entry 2, 190:1.
42. Kerr, Formosa Betrayed, 29–30.
43. Office of the Assistant Chief of Air Staff, Intelligence, Formosa: Interim Report, February
1944, NARA, RG 319, Records of the Office of the Assistant Chief of Staff (319.9), Box 1880.
44. Naval School of Military Government and Administration (New York), “Taiwan and the
Development of Hainan Island,” ca. December 1943, George H. Kerr Papers, Hoover Institution
Archives, Stanford University, Box 5.
45. Office of the Assistant Chief of Air Staff, Intelligence, “Hainan Island: Supplement to Interim
Report of September 1943,” July 1944, NARA, RG 319, Box 1881.
46. Research and Analysis Branch of Central Information Division, OSS, Special Report on
Formosa, January 15, 1944, NARA, RG 226, Entry 210, Box 178; U.S. Joint Psychological Warfare
Committee, “Seizure and Occupation of Formosa,” memorandum, May 16, 1944, RG 218, Entry 2,
190:1.
47. For more about the Taiwan-Luzon controversy during the war, see, for example, William B.
Hopkins, The Pacific War: The Strategy, Politics, and Players that Won the War (Minneapolis, MN:
Zenith, 2008), 237–248; William Manchester, American Caesar: Douglas MacArthur, 1880–1964
(London: Little, Brown, 1978), 374–458.
48. Gordon, “American Planning for Taiwan,” 222–223.
49. Samuel Eliot Morison, History of United States Naval Operations in World War II, vol. 8, The
Liberation of the Philippines, 1944–1945 (Boston: Little, Brown, 1959), 3–10.
50. Ibid., 224. See also Bernard C. Nalty, War in the Pacific: Pearl Harbor to Tokyo Bay
(Norman: University of Oklahoma Press, 1999), 178–192.
51. Hopkins, The Pacific War, 261–271.
52. Stephen Jurika Jr., ed., From Pearl Harbor to Vietnam: The Memoirs of Admiral Arthur W.
Radford (Stanford, CA: Hoover Institution Press, 1980), 42–44.
53. OSS, “Formosa Defense Measure,” confidential memorandum, December 12, 1944, NARA, RG
226, Entry 211, Box 4.
54. Joseph W. Ballantine, Formosa: A Problem for United States Foreign Policy (Washington,
DC: The Brookings Institution, 1952), 55–56.
55. John Service, “Chinese Communist Views Regarding Post-War Treatment of Japan,” report
enclosure, September 23, 1944, FRUS 1944, vol. 6, China, 585–586.
56. “SWNCC 68 Series—National Composition of Forces to Occupy Formosa,” March 19, 1945, in
State-War-Navy Coordinating Committee, ed., SWNCC Summary of Actions and Decisions, Part II,
149, July 7, 1948, NARA, RG 334, Records of Interservice Agencies, State-Army-Navy-Air Force
Coordinating Committee Actions and Decisions 1947–1949, Entry 16A, Box 16.
 57. OSS Far East Intelligence, “Notes No. 6,” April 2, 1945, United States Office of Strategic
Services Miscellaneous Records, Hoover Institution Archives, Stanford University, digital copy on the
Hoover Archives workstation.
58. “SWNCC 53 Series—Relations of the Military Government of Formosa with China and the
Chinese,” March 13, 1945, in SWNCC Summary of Actions and Decisions, Part I, 116, July 7, 1948,
NARA, RG 334, Entry 16A, Box 16.
59. “SWNCC 56 Series—Japanese Investments in Formosa,” March 13, 1945, in SWNCC Summary
of Actions and Decisions, Part I, 121, July 7, 1948, NARA, RG 334, Entry 16A, Box 16.
60. U.S. Joint Staff Planners, “Development of Operations in the Pacific,” memorandum, June 23,
1945, NARA, RG 218, Entry 1, 190:1.
61. Joint Chiefs of Staff, “Operational Plan for Secret Intelligence Penetration of Formosa,”
memorandum, April 12, 1945, NARA, RG 218, Geographical File 1942–1945, Entry 1, 190:1. See also,
Ballantine, Formosa, 56–57, and Kerr, Formosa Betrayed, 31–33.
62. “SWNCC 16/2 Series,” August 31, 1945, in SWNCC Summary of Actions and Decisions, Part
I, 121, July 7, 1948, NARA, RG 334, Entry 16A, Box 16.
63. See Qin Xiaoyi, ed., Guomin Geming yu Taiwan [The national revolution and Taiwan] (Taipei,
Taiwan: Jindai Zhongguo chubanshe, 1980), 142–143.
64. CKSD, diary entries for November 14, 21, and 24, 1943, Box 43.
65. For more information about Chen Yi and his political careers, see Lai Tse-han, “Chen Yi yu Min
Zhe Tai Sansheng Shengzheng” [Chen Yi and the administration of Fujian, Zhejiang, and Taiwan
provinces], in Zhonghua Minguo Jianguo Bashinian Xueshu Taolunji [Symposium on eighty-year
history of the Republic of China], ed., Symposium Editorial Committee, vol. 4 (Taipei, Taiwan: Jindai
Zhongguo chubanshe, 1991), 233–356.
66. Lin Tung-fa, Zhanhou Zhongguo de Bianju—Yi Guomindang wei Zhongxin de Tantao,
1945–1949 [Change of situation in postwar China: An investigation centered on the Kuomintang,
1945–1949] (Taipei: Taiwan Commercial Press, 2003), 238–240.
67. OSS Research and Analysis Branch of Central Information Division, “Formosa,” November 13,
1944, NARA, RG 226, Entry 210, Box 179.
68. Kerr, Formosa Betrayed, 48. For more information about Chen Yi’s trip to Taiwan, see Fujian
Provincial Government, ed., Taiwan Kaocha Baogao [Survey report on Taiwan] (Fuzhou, China: Fujian
Provincial Government, 1935).
69. Steven Phillips, “Between Assimilation and Independence: Taiwanese Political Aspirations under
Nationalist Chinese Rule, 1945–1948,” in Taiwan: A New History, ed. Murray A. Rubinstein (New
York: M.E. Sharpe, 2007), 280–281. For more information about the “half-mountain people,” see Jacobs,
“Taiwanese and the Chinese Nationalists,” 84–118.
70. Zhang Lisheng (secretary-general of the Executive Yuan) to Chiang Kai-shek, March 15, 1944,
in Guangfu Taiwan, 41–42; Taiwan Investigation Committee minutes, July 13, 1944, in Guangfu
Taiwan, 58–65.
71. See Chen Yi to Chen Lifu, May 10, 1944, and Chen Lifu to Chen Yi, July 10, 1944, in Guangfu
Taiwan, 53–55.
72. CKSD, diary entry for October 13, 1945, Box 44.
73. Minutes of the Taiwan Investigation Committee, July 21, 1944, in Guangfu Taiwan, 65–76.
74. Ibid.
75. Ibid. For more about the “half-mountain” Taiwanese point of view on governing Taiwan, see also
Lu Fangshang, “Taiwan Geming Tongmenghui yu Taiwan Guangfu Yundong, 1940–1945” [The Taiwan
Revolutionary League and the movement for the restoration of Taiwan, 1940–1945], in Zhongguo
Xiandaishi Zhuanti Yanjiu Baogao [Report of seminar on contemporary Chinese history], ed.
Research Center for Historical Materials of the Republic of China, vol. 3 (Taipei, Taiwan: Research
Center for Historical Materials of the Republic of China, 1973), 255–315.
76. Chen Yi to Chiang Kai-shek, “Proposal for Taiwan’s Takeover,” October 1944, in Guangfu
Taiwan, 86–96. Chiang approved the proposal in March 1945 (pp. 137–147).
77. Gauss to State Department, July 25, 1944, FRUS 1944, vol. 6, China, 1165–1166.
78. Edward Stettinius to Gauss, August 3, 1944; Gauss to Stettinius, August 28, 1944, FRUS 1944,
vol. 6, China, 1166.
 CHAPTER 2 ▪ A Troubled Beginning
1. OSS, Intelligence Division, “Notes on the New Governor of Formosa,” September 22, 1945,
NARA, RG 226, Entry 211, Box 4.
2. OSS, “Formosa Governor Appointment,” August 22, 1945, NARA, RG 226, Entry 211, Box 4.
3. U.S. Department of the Navy, Report of Evacuation of United Nations Prisoners of War from
Formosa, October 4, 1945, NARA, RG 127, Records of Marine Units, Box 25.
4. For more about Wedemeyer and the KMT-CCP confrontation in the immediate postwar period,
see Albert C. Wedemeyer, Wedemeyer Reports! (New York: Henry Holt, 1958), 344–365.
5. Sir Horace Seymour (British ambassador to China) to Foreign Office, Report on Tour of
Formosa 24th October~14th November, 1945, February 4, 1946, FO 371/53577, F10998/911/10.
6. Ralph J. Blake to U.S. embassy in China, Report on conditions in the Taihoku [Taipei] area,
Formosa, August 30, 1945, no. 894A.00/8–3045, Formosa 1945–1949, reel 1; Research and Analysis
Branch of Central Information Division, November 13, 1945, RG 226, Entry 211, Box 4.
7. Report by Taiwan Provincial Garrison Command regarding the takeover of Taiwan, April 1946, in
Taiwan Guangfu he Taiwan Guangfuhou Wunian Shengqing [The Taiwan recovery and the
provincial situation of the ensuing five years] ed. Chen Mingzhong and Chen Xingtang (Nanjing: Nanjing
chubanshe, 1989), 1:155–162; Kerr, Formosa Betrayed, 74–75.
8. Research and Analysis Branch of Central Information Division, Report on the Political situation
in Formosa, October 16, 1945, NARA, RG 226, Entry 211, Box 4.
9. Kerr, Formosa Betrayed, 73–74, 77. See also Blake, Report on Conditions in the Taihoku
(Taipei) area, Formosa for similar observations.
10. Seymour, Report on Tour of Formosa.
11. C. M. Maclehose (British acting consul in Shanghai) to Foreign Office, FO 371/53671,
F10998/911/10, July 29, 1946; Kerr, Formosa Betrayed, 96.
12. “SWNCC 83 Series—U.S. Policy toward China,” April 3, 1945, in SWNCC Summary of Actions
and Decisions, Part 2, 167, July 7, 1948, NARA, RG 334, Entry 16A, Box 16.
13. For more information, see FRUS, 1946, vol. 10, The Far East: China, 1261–1267.
14. U.S. Embassy in China to secretary of state, Report on Situation in Taiwan, confidential,
August 22, 1947, no. 894A.00/8–2247, Formosa 1945–1949, reel 1.
15. Maclehose to Foreign Office, July 29, 1946.
16. Research and Analysis Branch of Central Information Division, “Formosa: Survey of conditions
in Formosa,” March 15, 1946, NARA, RG 226, Entry 211, Box 36.
17. Tai-chun Kuo and Ramon H. Myers, Taiwan’s Economic Transformation: Leadership,
Property Rights and Institutional Change 1949–1965 (London: Routledge, 2012), 30–31.
18. “General report on the takeover of Japanese properties in Taiwan,” June 30, 1947, Research and
Analysis Branch of Central Information Division, “Formosa: Survey of conditions in Formosa,” March
15, 1946, NARA, RG 226, Entry 211, Box 36, 400–496. See also Ming-sho Ho, “The Rise and Fall of
Leninist Control in Taiwan’s Industry,” China Quarterly no. 189 (2007): 162–179.
19. U.S. Consulate General in Shanghai to State Department, July 27, 1946, NARA, RG 59,
893.6363/7–2746.
20. John Leighton Stuart (U.S. ambassador to China) to State Department, August 13, 1946, NARA,
RG 59, 893.6363/8–1346; Stuart to State Department, August 26, 1946, 893.6363/8–2646.
21. Steven Phillips, “Between Assimilation and Independence,” 282–283. On Chen Yi’s economic
philosophy, see also Su Jiahong and Wang Chengxiang, “Chen Yi zai Tai Zhuzheng Qijian di Jingji
Zhengce: Sun Zhongshan Xiansheng ‘Minsheng Zhuyi’ di Shijian yu Beili” [Chen Yi’s economic policies
during his administration in Taiwan: The practice of and deviation from Sun Yat-sen’s Principle of the
People’s Livelihood], Guoli Guofu Jinianguan Guankan [Journal of National Dr. Sun Yat-sen
Memorial Hall], vol. 12 (2003): 55–70.
22. See Chen Yi’s instructions dated October 29 and December 7, 1945, and January 24 and
February 18, 1946, in Zhengfu Jieshou Taiwan Shiliao Huibian [Collection of data on the ROC’s
taking over of Taiwan] ed. Academia Historica (Taipei, Taiwan: Academia Historica, 1990), 1:123, 155–
158, 179–180, 232–235.
23. Research and Analysis Branch of Central Information Division, “Formosa,” January 18, 1946,
NARA, RG 226, Entry 211, Box 4.
24. Kerr, Formosa Betrayed, 95.
25. Ibid., 93, 95.
26. Lai Tse-han, Ramon H. Myers, and Wei Wou, A Tragic Beginning: The Taiwan Uprising of
February 28, 1947 (Stanford, CA: Stanford University Press, 1991), 86–87.
27. Research and Analysis Branch of Central Information Division, “Survey of Conditions in
Formosa,” March 15, 1946, NARA, RG 226, Entry 211, Box 4.
28. Kerr, Formosa Betrayed, 144–145.
29. Xiang Junci (head of the Department of Mechanized Infantry, Ministry of Military Affairs) to
Chiang Kai-shek, June 7, 1946, in Zhengfu Jieshou Taiwan Shiliao Huibian, 1:221–222.
30. Lai et al., A Tragic Beginning, 87–89. See also Denny Roy, Taiwan: A Political History
(Ithaca, NY: Cornell University Press, 2003), 55–75.
31. U.S. Embassy in China to secretary of state, “Political and Social Conditions and Personalities
and Group Interests on Taiwan,” confidential enclosure, September 14, 1946, no. 894A.00/9–1446,
Formosa 1945–1949, reel 1.
32. Jin Chongji, Zhuanzhe Niandai: Zhongguo di Yi-jiu-si-qi nian [A turning point: 1947 in China]
(Beijing: SDX Joint Publishing, 2002), 35–52.
33. CKSD, diary entries for October 22 and 24, 1946, Box 45.
34. CKSD, diary entry for October 24, 1946, Box 45.
35. CKSD, diary entry for October 25, 1946, Box 45.
36. CKSD, diary entry for October 26, 1946, Box 45.
37. See Chiang Kai-shek’s remarks on the press conference in Taipei, October 27, 1946, in Taiwan
Guangfu, ed. Chen and Chen, 1:303–305.
38. Douglas Mendel, The Politics of Formosan Nationalism (Berkeley: University of California
Press, 1970), 29–31.
39. U.S. Consulate in Taipei to U.S. Embassy in Nanking, “Public Uneasiness and Rumors and
Comment concerning the United States,” memorandum, January 10, 1947, enclosed in U.S. Embassy
China to secretary of state, February 14, 1947, no. 894A.00/2–1447, Formosa 1945–1949, reel 1.
40. G. M. Tingle (British consul in Tamsui), enclosed in Ralph Stevenson (British ambassador in
China) to Foreign Office, “Conditions in Formosa,” March 24, 1947, FO 371/63320, F4030/2443/10. See
also Lai et al., A Tragic Beginning, 96–98; Phillips, “Between Assimilation and Independence,” 292–
293.
41. Mei-ling T. Wang, The Dust That Never Settles: The Taiwan Independence Campaign and
U.S.-China Relations (Lanham, MD: University Press of America, 1999), 102–105.
42. For a detailed, officially commissioned account of the February 28 incident, see Lai Tse-han,
“Er-er-ba Shijian” Yanjiu Baogao [A research report on the February 28 incident] (Taipei, Taiwan:
China Times, 1994).
43. Andrew D. W. Forbes, Warlords and Muslims in Chinese Central Asia: A Political History
of Republican Sinkiang 1911–1949 (Cambridge: Cambridge University Press, 1986), 208–209.
44. Hao Weimin, ed., Neimenggu Zizhiqu shi [A history of the Inner Mongolia autonomous region]
(Hohhot, China: Neimenggu Daxue chubanshe, 1991), 2–25.
45. An analysis of the 1947 Tibetan civil war can be found in Hsiao-ting Lin, Tibet and Nationalist
China’s Frontier: Intrigues and Ethnopolitics, 1928–49 (Vancouver: University of British Columbia
Press, 2006), 182–198.
46. CKSD, diary entries for March 7 and 8, 1947, Box 46.
47. CKSD, diary entry for March 15, 1947, Box 46.
48. For more about the settlement committee, see Chen Yi-shen, “Zaitan Er-er-ba Shijian Chuli
Weiyuanhui—Guanyu qi Zhengzhi Lichang yu Jiaose Gongneng di Pinggu” [Reexamining the February
28 Incident Settlement Committee: An evaluation of its political stance, role, and function], in Er-er-ba
Shijian Yanjiu Lunwenji [Essays on the study of the February 28 incident], ed. Zhang Yanxian, Chen
Meirong, and Yang Yahui (Taipei, Taiwan: Wu San-lien Historical Foundation, 1998), 153–168.
49. CKSD, diary entry for March 8, 1947, Box 46.
50. CKSD, diary entry for March 15, 1947, Box 46; U.S. Embassy in China to State Department,
“Report on Formosa,” enclosure, March 14, 1947, no. 894A.00/3–1447, Formosa 1945–1949, reel 1.
For more about the Nationalist military suppression of the incident and the decision-making process, see
also Peng Mengqi, “Taiwan Er-er-ba Shijian Huiyilu” [A recollection of the February 28 incident of
Taiwan], in Er-er-ba Shijian Ziliao Xuanji [Selections from the February 28 incident historical
materials], ed. Institute of Modern History, Academia Sinica (Taipei, Taiwan: Institute of Modern
History, Academia Sinica, 1992), 1:39–108.
51. For debates on whether and how much the Nationalist leaders were responsible for causing the
February 28 incident, see, for example, Chen Yi-shen, “Qizhi shi ‘Weichi Zhi’an’ Eryi—Lun Jiang Jieshi
yu Taisheng Junzheng Shouzhan dui Er-er-ba Shijian de Chuzhi” [More than just ‘preserving public
security’—On the disposition of the February 28 incident by Chiang Kai-shek and Nationalist military
and political leaders in Taiwan], in Er-er-ba Shijian Xinshiliao Xueshu Lunwenji [Symposium on the
new source materials from the February 28 incident], ed. Li Wang-tai (Taipei, Taiwan: February 28
Incident Memorial Foundation, 2003), 144–161; and Huang Chang-chian, Er-er-ba Shijian Zhenxiang
Kaozhenggao [A draft of evidential investigations into the truth of the 2/28 incident] (Taipei, Taiwan:
Lianjing chubanshe, 2007).
52. Ralph Blake’s report was sent to Washington from Nanking on February 14, 1947. See U.S.
Embassy in Nanking to State Department, “Public Uneasiness, Rumors, and Comment Concerning the
United States,” January 10, 1947, no. 894A.00/2–1447, Formosa 1945–1949, reel 1.
53. Kerr, Formosa Betrayed, 243.
54. Ibid., 250–251.
55. Ibid., 223.
56. Ibid.
57. Ralph Blake, U.S. Embassy in Nanking to State Department, report, March 6, 1947, NARA, RG
59, 893.00/3–647.
58. “Conditions in Formosa,” enclosed in Stevenson to Foreign Office, March 24, 1947, FO
371/63320, F4030/2443/10.
59. Blake, U.S. Embassy Nanking to State Department, March 6, 1947.
 60. U.S. Embassy in China to State Department, March 8, 1947, no. 894A.00/3–847, Formosa
1945–1949, reel 1; CKSD, diary entry for March 6, 1947, Box 46.
61. George Kerr, memorandum for the U.S. Embassy in China, March 10, 1947, no. 894A.00/3–
1047, Formosa 1945–1949, reel 1.
62. U.S. Embassy in Nanking to State Department, March 14, 1947, no. 894A.00/3–1447, Formosa
1945–1949, reel 1.
63. U.S. Embassy in Nanking to the American Consular Offices in China, April 10, 1947, NARA,
RG 84, Records of the Foreign Service Posts of the Department of State, China: Nanking Embassy
Circular Instructions to the Consulates 1946–48, 124.66/Nanking.
64. Stuart to State Department, March 26, 1947, NARA, RG 59, 711.93/3–2647.
65. Dean Acheson to Stuart, April 2, 1947, NARA, RG 59, 893.00/3–3147.
66. Stuart to State Department, March 29, 1947, NARA, RG 59, 893.00/3–2947.
67. CKSD, diary entry for March 23, 1947, Box 46.
68. George H. Kerr, “Memorandum for the Ambassador on the Situation in Taiwan,” April 18, 1947,
enclosed in Stuart to State Department, April 21, 1947, NARA, RG 59, 893.00/4–2147.
69. CKSD, diary entry for March 17, 1947, Box 46.
70. For more about the evolution of Taiwan’s provincial administration, see Yang Zhengkuan, Cong
Xunfu dao Shengzhuxi—Taiwan Shengzhengfu Zuzhi Tiaoshi zhi Yanjiu [From the governor to the
provincial chairman—A study of the organizational adjustment of the Taiwan provincial government]
(Taichung: Taiwan Province Information Office, 1990).
71. Stuart to State Department, April 25, 1947, no. 894A.00/4–2547, Formosa 1945–1949, reel 1.
72. George Kerr, memorandum, enclosed in Stuart to State Department, May 31, 1947, no.
894A.00/5–3147, Formosa 1945–1949, reel 1.
73. Lai et al., A Tragic Beginning, 164–167.
74. See Yang’s report on the February 28 incident, in Taiwan “Er-er-ba” Shijian Dang’an Shiliao
[Archival materials on the February 28 incident of Taiwan], ed. Chen Xingtang (Taipei, Taiwan: Renjian
chubanshe, 1992), 1:274–280; Bai’s report to Chiang, dated April 14, 1947, in Er-er-ba Shijian Ziliao
Xuanji, ed. Institute of Modern History, Academia Sinica, 2:238–244. See also Kuo and Myers,
Taiwan’s Economic Transformation, 32–35.
75. E. T. Biggs (British consul in Tamsui), “Summary of events in Formosa during the first six months
of 1948,” July 24, 1948, in Taiwan Political and Economic Reports 1861–1960, ed. Robert L.
Jarman (Slough, UK: Archive Editions, 1997), 8:315.
 CHAPTER 3 ▪ Reformulating U.S. Policy toward Taiwan
1. George H. Kerr to State Department, “Probability of Communist Penetration in Formosa,”
memorandum, May 26, 1947, no. 894A.00/5–2647, Formosa 1945–1949, reel 1.
2. Kerr, Formosa Betrayed, 326–328.
3. Odd Arne Westad, Decisive Encounters: The Chinese Civil War, 1946–1950 (Stanford, CA:
Stanford University Press, 2003), 157–159.
4. Li Yunhan, Zhongguo Guomindang Shishu [A historical narrative of the KMT] (Taipei, Taiwan:
KMT Party Historical Committee, 1994), 3:687.
5. Intelligence Division, War Department General Staff, “Order of Battle of the Chinese Communist
Armed Forces,” August 27, 1947, NARA, RG 319, Records of the Office of the Assistant Chief of
Staff for Intelligence (319.12), Box 2900.
6. See, for example, Jin Chongji, Zhuanzhe Niandai, 147–158; Jay Taylor, The Generalissimo:
Chiang Kai-shek and the Struggle for Modern China (Cambridge, MA: Harvard University Press,
2009), 373–374; Christopher R. Lew, The Third Chinese Revolutionary Civil War, 1945–49 (London:
Routledge, 2009), 74–85.
7. Kerr, Formosa Betrayed, 345.
8. United States Department of State, ed., The China White Paper: August 1949 (Stanford, CA:
Stanford University Press, 1967), 1:308–310.
9. Stuart to State Department, August 23, 1947, FRUS 1947, vol. 7, The Far East: China, 740–741.
See also Mendel, The Politics of Formosan Nationalism, 40–41; Ong Joktik, “A Formosan’s View of
the Formosan Independence Movement,” China Quarterly, no. 15 (1963): 107–114.
10. U.S. Embassy in China to State Department, “Report on Situation in Taiwan,” confidential
memorandum, August 22, 1947, no. 894A.00/8–2247, Formosa 1945–1949, reel 1.
11. Sprouse to Wedemeyer, “Present Situation in China,” memorandum, August 23, 1947, FRUS
1947, vol. 7, The Far East: China, 744–745.
12. State-War-Navy Coordinating Committee, “Policies, Procedures and Cost of Assistance by the
United States to Foreign Countries,” top secret memorandum, October 3, 1947, issued on July 7, 1948,
NARA, RG 334, Entry 16A, Box 5.
13. State-War-Navy-Air Force Coordinating Committee, “SWNCC 272 Series—Formosa:
Acquisition of, by treaty,” October 15, 1947, NARA, RG 334, Entry 16A, Box 15.
14. Shen Keqin, Sun Liren Zhuan [The biography of Sun Liren] (Taipei, Taiwan: Xuesheng shuju,
1998), 2:463–476.
15. Chief of Naval Operations, entitled “Note on China by Commander Naval Forces Western
Pacific,” memorandum, October 7, 1947, NARA, RG 218, Geographical File 1946–1947, Entry: UD 4,
190: 1. See also Kerr, Formosa Betrayed, 353–355.
16. CKSD, diary entry for June 19, 1947, Box 46. There is no indication that Chiang’s decision to
send Sun to Taiwan was a result of political pressure from the United States.
17. CKSD, diary entry for June 18, 1947, Box 46.
18. Ralph Stevenson to Foreign Office, telegram, June 19, 1947, FO 371/63325, F9883/76/10.
19. Qin, ed., Zhonghua Minguo Zhongyao Shiliao Chubian, 7 (2), 892–905.
20. CKSD, diary entry for June 26, 1947, Box 46.
21. Su-feng Wu, “Song Ziwen yu Jianshe xin Guangdong” [T. V. Soong and the construction of new
Guangdong] Donghua Renwen Xuebao [Dong Hwa Journal of Humanities] no. 5 (2003): 129–130.
 22. U.S. Embassy in China to State Department, minutes of conversation between T. V. Soong and
Hiram A. Boucher (U.S. consul-general in Guangzhou), October 7, 1947, NARA, RG 59, 893.00/10–
747. See also Wu Jingping, Song Ziwen Pingzhuan [A critical biography of T. V. Soong] (Fuzhou,
China: Fujian renmin chubanshe, 1998), 520–521.
23. These “bandits” were anti-Japanese guerrilla forces in Guangdong during the Sino-Japanese war.
After the war, part of the forces refused to be disbanded and later regrouped under the Chinese
Communist Party’s remote control. See Guangdong Provincial Archives, ed., Dongjiang Zongdui
Shiliao [Source materials on the East River Column] (Guangzhou, China: Guangdong renmin
chubanshe, 1984), 7–12.
24. Sun Liren to T. V. Soong, December 20, 1947, T. V. Soong Papers, Box 9.
25. See Sun Liren to T. V. Soong, April 16, 1948 and Sun to Soong, September 24, 1948, T. V. Soong
Papers, Box 9.
26. Lester Little to T. V. Soong, November 19, 1947; Soong to Little, November 20, 1947, T. V.
Soong Papers, Box 36.
27. Leighton Stuart to Little, December 2, 1947; Little to Yu Hongjun (Nationalist minister of
finance), December 5, 1947, T. V. Soong Papers, Box 6. Nanjing received no response from
Washington regarding the loan needed for the customs forces.
28. T. V. Soong to U.S. Naval Advisory Group Survey Board (Guangzhou), telegram, December 29,
1947; A. L. Rorschach (U.S. Navy), “Establishment of Separate Water Police in Kwangtung Province,”
memorandum, December 29, 1947, T. V. Soong Papers, Box 36.
29. Rorschach to Soong, telegram, January 7, 1948, T. V. Soong Papers, Box 36.
30. T. V. Soong to Jiang Biao, April 10, 1948, T. V. Soong Papers, Box 19. The Control Yuan in
Nanjing later proposed the impeachment of Soong for his unauthorized purchase of these planes. See
Wu Jingping, Song Ziwen Zhengzhi Shengya Biannian [A chronology of T. V. Soong’s political
career] (Fuzhou, China: Fujian renmin chubanshe, 1998), 533.
31. See: T. V. Soong to Jiang Biao, telegrams, May 27, September 11, November 4, December 1,
1948, January 3, and 26, 1949, and Jiang to Soong, September 29, November 6, December 3, 1948, and
January 25, 1949, T. V. Soong Papers, Box 19.
32. Alexander Grantham (Hong Kong governor) to T. V. Soong, letter, June 4, 1948, T. V. Soong
Papers, Box 36.
33. “Memorandum of Agreement between the Central Bank of China and the Government of Hong
Kong,” August 15, 1947, T. V. Soong Papers, Box 29.
34. George Kitson, Foreign Office minutes, August 11, 1948, FO 371/63331, F10250/76/10.
35. H. L. Hsieh to T. V. Soong, telegrams, January 3, 1948; William Youngman to Soong, February
27, 1948, T. V. Soong Papers, Box 19.
36. Lanxin Xiang, Recasting the Imperial Far East: Britain and America in China, 1945–1950
(New York: M.E. Sharpe, 1995), 127–134.
37. Zhang Fakui to T. V. Soong, September 6, 1948, T. V. Soong Papers, Box 29.
38. Zhang Fakui, Jiang Jieshi yu Wo—Zhang Fakui Shangjiang Huiyilu [Chiang Kai-shek and I:
a memoir of General Zhang Fakui] (Hong Kong: Art and Culture, 2008), 438–439.
39. UNRRA-Fishery Rehabilitation Administration to T. V. Soong, October 23, November 6, 1947,
and January 13, 1948; Tateki Horiuchi, “Plans for the Development of Agriculture and Light Industry on
Hainan Island,” April 11, 1948; Tateki Horiuchi, “Memorandum regarding the development of Hainan
Island,” April 15, 1948, T. V. Soong Papers, Box 29.
 40. Tong Lu, “Lun Huanan ‘Jingjian’ Yinmou di Pochan” [On the bankruptcy of the economic
establishment conspiracy in South China], December 30, 1948, in Guangdong Geming Lishi Wenjian
Huiji [Collection of Guangdong revolutionary historical materials], ed. PRC Central Archives and
Guangdong Provincial Archives (Guangzhou, China: Guangdong Provincial Archives, 1988), 49:29–35.
41. Zhang, Jiang Jieshi yu Wo, 452–453.
42. CKSD, diary entry for May 19, 1948, Box 46.
43. CCP Guangdong-Guangxi border region committee, report, February 3, 1949, in Guangdong
Geming Lishi Wenjian Huiji, 49:526–545.
44. See Directives from the Political Department of the CCP Unit in Swatow, November 13, 1948, in
Guangdong Geming Lishi Wenjian Huiji, 59:172–175; Minutes of meeting held by the CCP Fujiang-
Guangdong-Jiangxi border region, February 1949, ibid., 240–254.
45. See Feng Baiju’s reports to CCP Central Military Committee, November 17 and 31, 1949, and
Feng’s reports to CCP Hong Kong Bureau, December 7, 1948, in Guangdong Geming Lishi Wenjian
Huiji, 44:578–585, 599–600; Feng’s report to CCP Ministry of United Front and the Hong Kong
Bureau, January 3, 1949, ibid., 48:110–111.
46. British War Office, “Will China Disintegrate?” memorandum enclosed in Foreign Office minutes
paper written by A. L. Scott, July 7, 1947, FO 371/63325, F9309/76/10.
47. Ralph Stevenson to Foreign Office, April 30, 1947, FO 371/63322, F5994/76/10.
48. U.S. Embassy in China to State Department, August 6, 1947, NARA, RG 59, 893.00/8–647. In
July 1948 T. V. Soong confirmed to American diplomats in Guangzhou that General Li was indeed
harboring some “interesting ideas” about China’s future, but did not believe Li would gain wide support.
See Raymond P. Ludden (U.S. consul-general in Guangzhou) to State Department, telegram, July 22,
1948, RG 59, 893.00/7–2248. For details of the meeting between Soong and Li concerning establishing a
new power base in South China, see also Jiang Ping, Li Jishen Quanzhuan [A comprehensive
biography of Li Jishen] (Beijing: Tuanjie chubanshe, 2002), 237–241.
49. U.S. Embassy in Nanjing to the American Consular Officers in China, “Separatist Tendencies in
China,” telegrams, July 21, 1947, NARA, RG 84, 800/China.
50. See Stuart to State Department, March 4, 1948, NARA, RG 59, 893.00/3–448; Stuart to State
Department, March 8, 1948, 893.00/3–848; Stuart to State Department, May 14, 1948, 893.00/5–1448;
Stuart to State Department, July 12, 1948, 893.00/7–1248; U.S. Embassy in China to State Department,
report, parts 1 and 2, August 10, 1948, 893.00/8–1048.
51. Intelligence Division, War Department General Staff, “Regional origin of Units in the Chinese
Nationalist Army,” September 16, 1947, NARA, RG 319, Records of the Office of the Assistant Chief
of Staff for Intelligence (319.12), Box 2900; “Military Implications in the Possible Disintegration of the
Chinese National Government Authority,” October 14, 1947, NARA, RG 319, Records of the Office of
the Assistant Chief of Staff for Intelligence (319.12), Box 2900.
52. “CIA Research Report, SR-8: China, I-22–24,” November 1947, in Central Intelligence Agency,
CIA Research Reports: China, 1946–1976 (Frederick, MD: University Publications of America,
1982), microfilm, reel 1.
53. See Stuart to State Department, July 12, 1948, telegram, NARA, RG 59, 893.00/7–1248;
“Limitations of South China as an Anti-Communist Base,” China Research Report ORE-30–48, June 4,
1948, CIA Research Report, reel 1.
54. For more about Bessac and his secret activities in Inner Mongolia, see Sechin Jagchid, The Last
Mongol Prince: The Life and Times of Demchugdongrob, 1902–1966 (Bellingham: Western
Washington University, 1999), 373–440.
 55. Ma Hongkui, Ma Shaoyun Huiyilu [A memoir of Ma Hongkui] (Hong Kong: Wenyi shuwu,
1984), 282–287. For more about America’s postwar policy toward Inner Mongolia, see Xiaoyuan Liu,
Reins of Liberation: An Entangled History of Mongolian Independence, Chinese Territoriality,
and Great Power Hegemony, 1911–1950 (Stanford, CA: Stanford University Press, 2006), 283–329.
56. For more information about Mackiernan and his espionage efforts in China’s western frontiers,
see Ted Gup, The Book of Honor: Covert Lives and Classified Deaths at the CIA (New York:
Anchor Books, 2001), 9–42 and Thomas Laird, Into Tibet: The CIA’s First Atomic Spy and His Secret
Expedition to Lhasa (New York: Grove, 2002).
57. J. Hall Paxton (U.S. consul in Urumqi), “Travels in Southern and Eastern Sinkiang,” memoranda
nos. 1, 2, 3, and 10, top secret, June 27, 1948, NARA, RG 59, 893.00 Sinkiang/6–2748.
58. Stuart to State Department, October 16, 1948, NARA, RG 59, 893.00/10–1648.
59. CIA, China Research Report ORE 45–48, “The Current Situation in China,” July 22, 1948, in
CIA Research Reports, China: 1946–1976, reel 1.
60. See British Consulate in Tamsui to British Embassy in Nanking, “Political Rumours: Formosa,”
July 25, 1947, in Taiwan Political and Economic Reports 1861–1960, ed. Robert L. Jarman, 8:294–
295; U.S. Consulate-General in Shanghai to State Department, December 7, 1947, NARA, RG 59,
894A.00/12–747.
61. U.S. Consulate General in Taipei to State Department, December 13, 1947, no. 894A.00/12–
1347, Formosa 1945–1949, reel 1.
62. U.S. Consulate General in Taipei to State Department, May 13, 1948, no. 894A.00/5–1348,
Formosa 1945–1949, reel 1.
63. “Memorandum of Conversation with General MacArthur at Tokyo,” December 7, 1948, no.
894A.00/1–649, Formosa 1945–1949, reel 1.
64. “The Political and Economic Appreciation of the Situation in China,” December 10, 1948, CAB
134/285/FE(O)(48)34. See also Westad, Decisive Encounters, 200–202.
65. Ibid., 192–211. For more about the three great campaigns of the Chinese civil war, see Liu Tong,
Zhongguo di Yi-jiu-si-ba nian—Liangzhong Mingyun di Juezhan [1948 in China: a decisive battle
between the two fates] (Beijing: SDX Joint Publishing, 2006).
66. Chiang noted on November 23, 1948 that, as a result of the worsening situation within and outside
China, Madame Chiang was emotionally and psychologically out of control, and both Chiang and his
wife were suffering insomnia. See CKSD, diary entry for November 23, 1948, Box 47.
67. CKSD, diary entry for November 25, 1948, Box 47.
68. For more about Madame Chiang’s efforts to solicit support in the United States, see Hannah
Pakula, The Last Empress: Madame Chiang Kai-shek and the Birth of Modern China (New York:
Simon & Schuster, 2009), 563–578.
69. Robert J. Donovan, Tumultuous Years: The Presidency of Harry S. Truman, 1949–1953
(New York: W. W. Norton, 1982), 72–73.
70. CKSD, diary entries for December 16 and 18, 1948, Box 47.
71. CKSD, diary entries for December 22 and 25, 1948 and January 1, 1949, Box 47; Lin, Zhanhou
Zhongguo de Bianju, 300–303.
72. CKSD, diary entries for December 23 and 24, 1948, Box 47; Lin, Zhanhou Zhongguo de
Bianju, 241–242.
73. CKSD, diary entry for December 25, 1948, Box 47. See also Nancy Bernkopf Tucker, ed.,
China Confidential: American Diplomats and Sino-American Relations, 1945–1996 (New York:
Columbia University Press, 2001), 32–33.
 74. Te-kong Tong and Li Tsung-jen, The Memoirs of Li Tsung-jen (Boulder, CO: Westview, 1979),
483–486.
75. “United States Policy toward China,” January 11, 1949, NSC 34/1, FRUS: 1949, vol. 9, 474–
475.
76. U.S. Embassy in China to George Marshall, October 16, 1948, NARA, RG 59, 893.00/10–1648;
China Research Report ORE-77–48 entitled “Chinese Communist Capabilities for Control of All China,”
December 10, 1948, CIA Research Reports, China: 1946–1976, reel 1.
77. “The political and economic appreciation of the situation in China,” cabinet minutes, December
10, 134/285/FE(O)(48)34. See also Wu, Song Ziwen Pingzhuan, 521.
78. James Brennan to T. V. Soong, January 4, 11, and 20, 1949, T. V. Soong Papers, Box 19.
79. Kenneth Krentz (U.S. consul-general in Taipei) to Secretary of State Dean Acheson, January 15,
1949, no. 894A.00/1–1549, Formosa 1945–1949, reel 1.
80. Krentz to Acheson, January 2, 1949, no. 894A.01/1–249, Formosa 1945–1949, reel 1; CIA
memorandum, August 9, 1949, CIA Research Reports: China, 1946–1976, reel 1.
81. See, for example, Taylor, The Generalissimo, 362.
82. Chiang Kai-shek to Madame Chiang, January 17, 1949, PCKSC/JZJ, vol. 3.
83. Madame Chiang to Chiang Ching-kuo, letters, December 28, 1948 and February 6, 1949, PCKSC
/ JXWZ.
84. CKSD, diary entries for January 11, 18, and 22, 1949, Box 47.
85. See, for example, K. C. Wu, Ye Lailin: Wu Guozhen Jianzheng di Guo Gong Douzheng [The
night cometh: A personal study of Communist techniques in China] (Hong Kong: Chinese University
Press, 2009), 255–259.
86. See, for example, Elizabeth Converse, “Formosa: Private Citadel?” Far Eastern Survey 18: 21
(October 1948): 249–250.
87. A careful analysis of the U.S. policy choice debate on Taiwan in early 1949 can be found in
David M. Finkelstein, Washington’s Taiwan Dilemma, 1949–1950: From Abandonment to Salvation
(Fairfax, VA: George Mason University Press, 1993), 109–132.
88. “Note by the Secretaries to the Joint Chiefs of Staff on the Current Position of the United States
with respect to Formosa,” February 3, 1949, NARA, RG 218, Geographical File 1948–50, Entry: UD 7,
190:1; “Note by the Secretaries to the Joint Chiefs of Staff on the Strategic Importance of Formosa,”
February 7, 1949, ibid.
89. For a careful discussion of this issue, see Jonathan Fenby, Chiang Kai-shek: China’s
Generalissimo and the Nation He Lost (New York: Carroll & Graf, 2003), 473–498.
90. “Note by the Secretaries to the Joint Chiefs of Staff on Supplementary Measures with respect to
Formosa,” March 3, 1949, NARA, RG 218, Geographical File 1948–50, Entry: UD 7, 190:1.
91. The British observed that Admiral Oscar Badger, commander of the U.S. Western Pacific Fleet,
as well as Roger Lapham and Allan Griffin of the Economic Cooperation Administration in China, was
also in Taiwan around the time of Merchant’s visit to the island. See E. T. Biggs (British consul in
Tamsui), “Summary of Events in Formosa during February 1949,” in Taiwan Political and Economic
Reports 1861–1960, ed. Jarman, 8:484–486.
92. Finkelstein, Washington’s Taiwan Dilemma, 134–135. See also Tai Wan-chin, “The U.S. Policy
toward Taiwan in 1949 and the Mission of Livingston T. Merchant,” Tamkang Journal of
International Affairs (Taipei), 9, no. 3 (2006): 93–125.
93. U.S. Consulate General in Taipei to State Department, March 6, 1949, no. 894A.00/3–649,
Formosa 1945–1949, reel 2.
 94. Finkelstein, Washington’s Taiwan Dilemma, 136–137.
95. Robert Griffin, deputy chief of ECA in China, who advocated that drastic means be used to
prevent Taiwan from falling into either Nationalist or Communist hands, went over the situation in
Taiwan closely with Merchant on the eve of the latter’s mission to the island. See Griffin to Roger
Lapham (chief of ECA in China), February 25 and March 19, 1949, Robert A. Griffin Papers, Hoover
Institution Archives, Stanford University, Box 1.
96. Zhu Hongyuan, “Sun Liren yu Mai Shuai: Yi-jiu-si-jiu nian” [Sun Liren and MacArthur: 1949], in
Yi-jiu-si-jiu nian: Zhongguo de Guanjian Niandai Xueshu Taolunhui Lunwenji [Symposium on the
crucial year of China, 1949], ed. Academia Historica (Taipei, Taiwan: Academia Historica, 2000), 305–
311; Shen, Sun Liren Zhuan, 2:694–696.
97. Acheson to Merchant, March 6, 1949, no. 894A.00/3–649, Formosa 1945–1949, reel 2.
98. Merchant to Acheson, enclosed in U.S. Consulate General in Taipei to State Department, March
9, 1949, NARA, RG 59, 893.00/3–949; U.S. Consulate General in Shanghai to State Department, March
11, 1949, 893.50 Recovery/3–1149.
99. Here Chen Cheng might have been playing a double game. On the one hand he informed
Kenneth Krentz that if Washington was interested in Sun Liren becoming governor of Taiwan, he could
accomplish this by appealing to Chiang Kai-shek not to block such a transfer. On the other hand, sensing
that the Americans did not favor supporting him, Chen was eager to display his loyalty to Chiang. See
Stuart to State Department, March 14, 1949, NARA, RG 59, 893.01/3–1449; Donald Edgar (U.S.
consul in Taipei) to State Department, March 19, 1949, 893.00/3–1949.
100. Stuart to State Department, April 10, 1949, NARA, RG 59, 893.00/4–1049.
101. U.S. State Department, “Implementation of NSC 37/2 regarding United States Policy toward
Formosa,” May 12, 1949, no. 894A.00/5–1249, Formosa 1945–1949, reel 2.
102. Policy Planning Staff, “A Possible Course of Action with respect to Formosa and the
Pescadores,” draft memorandum, June 23, 1949, FRUS 1949, vol. 9, The Far East: China, 359.
 CHAPTER 4 ▪ Chiang Kai-shek in Eclipse
1. CKSD, diary entries for December 27, 1948 and January 18, 1949, Box 47; Chiang Kai-shek to Yu
Hanmou, instruction, January 13, 1949, CB, 10–0858; Stuart to Dean Acheson, January 4, 1949, NARA,
RG 59, 893.00/1–449; Stuart to Acheson, January 22, 1949, 893.00 Chiang Kai-shek/1–2249; F. van de
Arend (U.S. consul general in Chongqing) to State Department, March 11, 1949, RG 84, 350/Chungking.
2. The move to transfer national reserves out of Shanghai began around the second week of
November 1948. See Chiang Kai-shek’s secret instruction to Yu Hongjun (governor of Central Bank of
China), November 10, 1948, CB, 10–0783.
3. Wu Xingyong, Huangjin Dang’an—Guofu Huangjin yun Tai Yi-jiu-si-jiu nian [Gold file:
Transfer of Nationalist China’s gold reserve from Shanghai to Taiwan in 1949] (Taipei: Taiwan Elite,
2007). According to the CIA’s estimation, the total reserves being moved to Taiwan amounted to 106
million USD. See CIA memorandum, August 5, 1949, CIA Research Reports: China, 1946–1976,
reel 1.
4. Institute of Modern History, Academia Sinica, ed., Bai Chongxi Xiansheng Fangwen Jilu [The
reminiscences of Mr. Bai Chongxi] (Taipei, Taiwan: Institute of Modern History, Academia Sinica,
1984), Part 2, 864–865.
5. CKSD, diary entries for December 31, 1948 and January 2 and 3, 1949, Box 47.
6. For a detailed narration of Chiang’s daily activities at Xikou, see Chiang Ching-kuo, Fengyuzhong
de Ningjing [Calm in the eyes of a storm] (Taipei: Liming Wenhua, 1974), 117–189; Zhang Ling’ao, Wo
zai Jiang Jieshi Shicongshi de Rizi [My days of serving at Chiang Kai-shek’s Office of Aides] (Hong
Kong: Mingbao chubanshe, 1995), 418–453.
7. Edwin W. Martin, who served in the U.S. consulate in Hankou in 1948–1949, recalled that by late
1948 the Guangxi Clique was in control of Central China, and Chiang Kai-shek was most reluctant to
call on Bai Chongxi for support. See Tucker, ed., China Confidential, 33.
8. Stuart to Acheson, January 20, 1949, NARA, RG 59, 893.00/1–2049.
9. Stuart to Acheson, January 25, 1949, NARA, RG 59, 893.00/1–2549; U.S. Consulate in Hankou to
Acheson, February 7, 1949, NARA, RG 59, 893.00/2–749; Lewis Clark to Acheson, February 22, 1949,
NARA, RG 59, 893.00/2–2249.
10. Tong and Li, The Memoirs of Li Tsung-jen, 511–513.
11. CKSD, diary entry for June 27, 1948, Box 47.
12. CKSD, diary entries for June 19, 21, 24, and 26, 1948, Box 47.
13. CKSD, diary entries for June 13 and 27, 1948, Box 47.
14. CKSD, diary entries for January 1 and 11, 1949, Box 47.
15. On Chiang’s strategic thinking about this territorial triangle, see CKSD, diary entries for January
22, February 25, and March 18, 24, and 26,1949, Box 47.
16. John M. Cabot, (U.S. consul general in Shanghai) to Dean Acheson, May 19, 1949, NARA, RG
59, 893.00/5–1949.
17. Tong and Li, The Memoirs of Li Tsung-jen, 508–509.
18. Roger Lapham to Paul Hoffman (economic cooperation administrator), “Recommendations
Regarding China Policy,” memorandum, March 9, 1949, Robert A. Griffin Papers, Box 1.
19. Lapham to Griffin, letter, March 17, 1949, Robert A. Griffin Papers, Box 1.
20. George Kerr, “Elements of the Formosan Problem,” memorandum enclosed in Kerr to W. W.
Butterworth, January 7, 1949, no. 894A.00/1–749, Formosa 1945–1949, reel 1; Kerr to Butterworth,
January 23, 1949, no. 894A.00/1–2349, Formosa 1945–1949, reel 1.
 21. CIA, “Probably Development in Taiwan,” China Research Report ORE 39–45, March 14, 1949,
CIA Research Reports: China, 1946–1976, reel 1.
22. Lapham to Griffin, letter, March 22, 1949, Robert Griffin Papers, Box 1.
23. Wedemeyer, Wedemeyer Reports! 325; U.S. Senate Committees on Armed Services and
Foreign Relations, Hearings to Conduct an Inquiry into the Military Situation in the Far East and
the Facts Surrounding the Relief of General of the Army Douglas MacArthur from His
Assignments in That Area, 82nd Congress, 1st Session, 1951, 56–57, 183. On the other hand, Shen
Keqin, General Sun’s aide-de-camp in 1949–1950, pointed out that the “Virginia connections” were
exactly what would preclude Sun from replacing Chiang Kai-shek’s status, as most of the Nationalist
higher-ranking military officers were from Whampoa lineage and would not accept Sun’s leadership.
Shen Keqin, interview with author, December 6, 2007.
24. Sun to MacArthur, March 5, 1949. Shen Keqin Papers, Hoover Institution Archives, Stanford
University, Box 1.
25. Ibid. For more about Sun Liren’s visit in Tokyo in 1949, see Howard Schonberger, Aftermath of
War: Americans and the Remaking of Japan, 1945–1952 (Kent, OH: The Kent State University
Press, 1989), 80–85, 264–265.
26. Edgar to Acheson, May 11, 1949, no. 894A.00/5–1149, Formosa 1945–1949, reel 2.
27. Spence, The Search for Modern China, 510. There has been a debate as to whether, in early
1949, Stalin discouraged Mao from crossing the Yangtze for fear of being dragged into a direct
confrontation with the United States. Apparently Mao ignored Stalin’s advice, if given. See Westad,
Decisive Encounters, 216–218; Donggil Kim, “The Crucial Issues of the Early Cold War: Stalin and the
Chinese Civil War,” Cold War History, 10 no. 2 (2010): 185–202.
28. Westad, Decisive Encounters, 240–243; Tong and Li, The Memoirs of Li Tsung-jen, 515–517.
29. CKSD, diary entries for April 22 and 23, 1949, Box 47; Lewis Clark (U.S. minister-counselor in
embassy) to Acheson, April 25, 1949, NARA, RG 59, 893.01/4–2549.
30. Lloyd Eastman, Jerome Ch’en, Suzanne Pepper, and Lyman P. van Slyke, The Nationalist Era
in China, 1927–1949 (Cambridge: Cambridge University Press, 1991), 350–351.
31. Yu Hongjun to Chiang and Chen Cheng, telegram, May 14, 1949, GW / ZZS, Part 2; British
Consulate in Tamsui, “Recent Developments in Formosa,” April 25, 1949, in Taiwan Political and
Economic Reports 1861–1960, ed. Jarman, 8:395–396; Edgar to Acheson, April 10, 1949, no.
894A.00/4–1049, Formosa 1945–1949, reel 2; Edgar to Acheson, April 11, 1949, no. 894A.00/4–1149,
Formosa 1945–1949, reel 2.
32. Chiang Kai-shek to T. V. Soong, May 2, 1949, GW / ZZS, Part 2.
33. Albert Wedemeyer to Chiang Kai-shek, May 10 and June 1, 1949, Albert C. Wedemeyer Papers,
Hoover Institution Archives, Stanford University, Box 100.
34. Chiang to Wedemeyer, May 22, 1949, letter, Albert C. Wedemeyer Papers, Hoover Institution
Archives, Stanford University, Box 100.
35. See Tong and Li, The Memoirs of Li Tsung-jen, 514–515; Chiang, Fengyuzhong de Ningjing,
190–192; Lewis Clark to Acheson, April 25, 1949, NARA, RG 59, 893.01/4–2549; Clark to Acheson,
May 1, 1949, NARA, RG 59, 893.001 Chiang Kai-shek/5–149.
36. CKSD, diary entries for May 9, 12, 13, 14, and 16, 1949, Box 47.
37. CKSD, diary entry for May 12, 1949, Box 47.
38. Clark to Acheson, April 29, 1949, NARA, RG 59, 893.00/4–2949.
39. Clark to Acheson, May 1, 1949, NARA, RG 59, 893.001 Chiang Kai-shek/5–149; CIA,
memorandum, June 1, 1949, CIA Research Reports: China, 1946–1976, reel 1.
 40. Clark to Acheson, April 29, 1949, no. 894A.01/5–2049, Formosa 1945–1949, reel 3.
41. CKSD, diary entries for May 18, 20, and 21, 1949, Box 47.
42. Edgar to Acheson, April 29, 1949, NARA, RG 59, 893.50/4–2949.
43. Lewis to Acheson, June 2, 1949, no. 894A.02/6–249, Formosa 1945–1949, reel 3. The Chinese
Maritime Customs Service was a Chinese government tax collection agency from its founding in 1854
until its 1949 bifurcation into services operating in Taiwan and in the Communist Chinese mainland. It
was an international, predominantly British-staffed bureaucracy under the control of successive Chinese
central governments. In January 1950, Lester Little, the last inspector-general, resigned and the
responsibilities of the service were divided between what eventually became the Customs General
Administration of the People’s Republic of China, and the Republic of China Directorate General of
Customs on Taiwan. For more about the history of the Chinese Maritime Customs Service, see Donna
Brunero, Britain’s Imperial Cornerstone in China: The Chinese Maritime Customs Service, 1854–
1949 (London: Routledge, 2006).
44. Chen Cheng, Chen Cheng Xiansheng Huiyilu—Jianshe Taiwan [The Memoirs of Chen
Cheng: The Development of Taiwan] (Taipei, Taiwan: Academia Historica, 2005), 1:63–64.
45. For more information about the Taiwan Production Board and its significance, see Chen Siyu,
Taiwan qu Shengchan Shiye Guanli Weiyuanhui yu Jingji Fazhan Celue, 1949–1953 [The Taiwan
Production Board and the strategy for economic development] (Taipei, Taiwan: SMC Publishing, 2002).
46. Chen, Chen Cheng Xiansheng Huiyilu—Jianshe Taiwan, 1:65–66; Copper, Taiwan, 136–137.
47. Chen Li’an, Cheng Chen’s eldest son, informed the author that his father disagreed with Chiang
Kai-shek about how to govern and defend Taiwan, and that his father was by no means a protégé of
Chiang. Chen Li’an, interview with author, August 2, 2010.
48. Thomas B. Gold, State and Society in the Taiwan Miracle (New York: M.E. Sharpe, 1997),
53–55; Peter Chen-main Wang, “A Bastion Created, A Regime Reformed, An Economy Reengineered,
1949–1970,” in Taiwan: A New History, ed. Rubinstein, 324.
49. Liu Jinqing, Zhanhou Taiwan Jingji Fenxi [An analysis of postwar Taiwan’s economy] (Taipei,
Taiwan: Renjian chubanshe, 1992), 73–74.
50. See Taiwan Xinsheng Bao (Taipei), May 1 and 14, 1949.
51. Chen, Chen Cheng Xiansheng Huiyilu—Jianshe Taiwan, 1:21–26.
52. CKSD, diary entry for May 22, 1949, Box 47.
53. CKSD, diary entry for May 25, 1949, Box 47.
54. Xue Qingyu, Sun Liren Jiangjun Zhuan [A biography of General Sun Liren] (Hohhot, China:
Neimenggu Daxue chubanshe, 2000), 318; Shen Keqin, interview with author, December 6, 2007.
55. CKSD, diary entries for June 6, 7, and 11, 1949, Box 47.
56. CKSD, diary entries for May 29 and June 4, 1949, Box 47.
57. Edgar to Acheson, June 3, 1949, no. 894A.00/6–349; State Department, top secret memorandum,
June 8, 1949, no. 894A.00/6–849, Formosa 1945–1949, reel 2.
58. CKSD, diary entries for June 11, 12, July 16, 19, 31, and August 12, 1949, Box 47.
59. State Department to National Security Council, top secret memorandum, June 15, 1949, no.
894A.00/6–1549; Edgar to Acheson, August 24, 1949, no. 894A.00/8–2449, Formosa 1945–1949, reel
2.
60. CKSD, diary entry for August 13, 1949, Box 47; Edgar to Acheson, August 19, 1949, no.
894A.00/8–1949, Formosa 1945–1949, reel 2.
61. CKSD, diary entry for June 15, 1949, Box 49.
 62. Wilson D. Miscamble, George F. Kennan and the Making of American Foreign Policy,
1947–1950 (Princeton, NJ: Princeton University Press, 1992), 106–111.
63. U.S. Senate, Final Report of the Select Committee to Study Governmental Operations with
Respect to Intelligence Activities (Washington, DC: U.S. Government Printing Office, 1976), 4:132.
64. Finkelstein, Washington’s Taiwan Dilemma, 224.
65. Ibid., 226–227; MacDonald to State Department, November 25, 1949, no. 894A.00/11–2549,
Formosa 1945–1949, reel 2.
66. CKSD, diary entries for June 15 and 17, 1949, Box 47.
67. CKSD, diary entries for June 18 and 20, 1949, Box 47.
68. British Consulate in Tamsui, “Summary of Events in Formosa during April, 1949,” May 8, 1949, in
Taiwan Political and Economic Reports 1861–1960, ed. Jarman, 8:503.
69. MacDonald to Acheson, September 15, 1949, no. 894A.00/9–1549, Formosa 1945–1949, reel
2.
70. British Consulate in Tamsui to Foreign Office, “Tamsui telegram No. 12,” May 21, 1949, in
Taiwan Political and Economic Reports 1861–1960, ed. Jarman, 8:402.
71. British Consulate in Tamsui to Foreign Office, “Tamsui telegram No. 44,” May 27, 1949, in
Taiwan Political and Economic Reports 1861–1960, ed. Jarman, 8:403.
 CHAPTER 5 ▪ Last Gasp on the Mainland
1. Clark to Acheson, July 1, 1949, NARA, RG 59, 893.00/7–149; Clark to Acheson, July 6, 1949,
893.00/7–649.
2. CKSD, diary entry for July 20, 1949, Box 47.
3. Zhou Hongtao, Jianggong yu Wo—Jianzheng Zhonghua Minguo Guanjian Bianju [Chiang
Kai-shek and I: witnessing the critical moments of the Republic of China] (Taipei, Taiwan: Tianxia
Wenhua, 2003), 123–125; Tong and Li, The Memoirs of Li Tsung-jen, 522.
4. Clark to Acheson, July 19, 1949, NARA, RG 59, 893.01/7–1949.
5. “Meeting with President Li Tsung-jen,” memorandum by Griffin, May 22, 1949, Robert Griffin
Papers, Box 3.
6. Chiang Kai-shek to Chen Zhiping (Chinese minister to Philippines), telegram, July 8, 1949, TD /
FF, vol. 73, no. 54848; minutes of meeting between Chiang and Quirino, July 11, 1949, TD / FF, vol. 73,
no. 54852.
7. Clark to Acheson, July 11, 1949, NARA, RG 59, 893.001, Chiang Kai-shek/7–1149.
8. State Department Office of Chinese Affairs, “Chiang-Quirino Proposal for a Pacific Union,”
memorandum, July 19, 1949, ROCA, reel 7.
9. CIA, “Chiang-Quirino Conference,” memorandum, July 21, 1949, CIA Research Reports: China,
1946–1976, reel 1.
10. Edgar to Acheson, July 18, 1949, no. 894A.00/7–1849, Formosa 1945–1949, reel 1.
11. Edgar to Acheson, July 14, 1949, no. 894A.00/7–1449, Formosa 1945–1949, reel 1.
12. CKSD, diary entry for July 13, 1949, Box 47.
13. Ralph Stevenson to Foreign Office, September 20, 1949, FO 371/75733, F1533/1533/10. For
more about the details of Chiang’s trip to Jinhae, see Shao Yulin, Shi Han Huiyilu [My mission to
Korea] (Taipei, Taiwan: Biographical Literature Press, 1980), 112–135. Shao was Nationalist China’s
ambassador to South Korea at the time of Chiang’s visit.
14. Shao Yulin (Chinese ambassador to South Korea) to Chiang, telegram, August 1, 1949, TD /
DHW, vol. 68, no. 54898; Chiang to Zhen Yanfen and Hong Lanyiu, telegram, August 7, 1949, TD /
DHW, vol. 68, no. 54908; Huang Shaogu and Dong Xianguang to Chiang, top secret report, December
20, 1949, TD / DHW, vol. 68, no. 54949.
15. Shao Yulin to Chiang, August 1, 1949, TD / DHW, vol. 68, no. 54928; CKSD, diary entry for
August 8, 1949, Box 47.
16. CKSD, diary entry for July 19, 1949, Box 47.
17. CKSD, diary entries for August 18 and 19, 1949, Box 47; Edgar to Acheson, August 24, 1949,
no. 894A.00/8–2449, Formosa 1945–1949, reel 2.
18. Internally circulated report by the South China working unit, 1949 (n.d.), in Guangdong Geming
Lishi Wenjian Huiji, 49:141.
19. British Consulate in Tamsui to Foreign Office, July 10, 1949, in Taiwan Political and Economic
Reports, 1861–1960, ed. Jarman, 8:412.
20. John J. MacDonald (U.S. consul general in Taipei) to Dean Acheson, August 11, 1949, NARA,
RG 59, 893.001 Chiang Kai-shek/8–1149; Edgar to Acheson, August 19, 1949, no. 894A.001/8–1949,
Formosa 1945–1949, reel 2; Edgar to Acheson, August 24, 1949, no. 894A.00/8–2449, Formosa
1945–1949, reel 2.
21. MacDonald to Acheson, August 30, 1949, no. 894A.00/8–3049, Formosa 1945–1949, reel 2.
 22. Edgar to Acheson, June 3, 1949, no. 894A.00/6–349; State Department, office memorandum,
June 8, 1949, no. 894A.00/6–849; Edgar to Acheson, August 24, 1949, no. 894A.00/8–2449;
MacDonald to Acheson, August 30, 1949, no. 894A.00/8–3049, Formosa 1945–1949, reel 2. See also
CIA memorandum, June 14, 1949, CIA Research Reports: China, 1946–1976, reel 1.
23. MacDonald to Acheson, October 31, 1949, no. 894A.20/10–3149, Formosa 1945–1949, reel 3.
24. MacDonald to Acheson, September 16, 1949, no. 894A.01/9–1649, Formosa 1945–1949, reel
3.
25. Clark to Acheson, August 5, 1949, NARA, RG 59, 893.00/8–549; Tong and Li, The Memoirs of
Li Tsung-jen, 526–527.
26. Clark to Acheson, August 5, 1949, NARA, RG 59, 893.00/8–549; Guo, ed., Bai Chongxi
Xiansheng Fangwen Jilu, 2:879–881.
27. Clark to Acheson, August 6, 1949, NARA, RG 59, 893.00/8–649.
28. Wellington Koo to Acheson, “Memorandum on Proposed Military Aid Program from U.S.A. for
China,” August 15, 1949, NARA, RG 59, 893.50 Recovery/8–1549.
29. Wesley Jones to Acheson, August 28, 1949, NARA, RG 59, 893.20/8–2849.
30. Robert Strong to Acheson, September 6, 1949, NARA, RG 59, 893.00/9–649.
31. Strong to Acheson, September 16, 1949, NARA, RG 59, 893.20/9–1649.
32. Johnson to Acheson, “Memorandum by the Joint Chiefs of Staff,” enclosure, October 14, 1949,
NARA, RG 59, 893.50 Recovery/10–1449.
33. Max W. Bishop to Dean Rusk (deputy under secretary of state), “Study on the Problems
Involved in Military Aid to China,” memorandum, October 21, 1949, NARA, RG 59, 893.24/10–2149.
34. CIA China Research Report ORE 76-4, “Survival Potential of Residual Non-Communist
Regimes in China,” October 19, 1949, CIA Research Reports: China, 1946–1976, reel 1. See also
John Ranelagh, The Agency: The Rise and Decline of the CIA (London: Weidenfeld & Nicolson,
1986), 184–185.
35. Li Zonghuang, Li Zonghuang Huiyilu [The memoirs of Li Zonghuang] (Taipei, Taiwan: Society
of China Local Autonomy, 1972), 2:271.
36. For a detailed discussion of the intricate relationship between Long Yun and Chiang Kai-shek,
see Yang Weizhen, Cong Hezuo dao Juelie: Long Yun yu Zhongyang de Guanxi, 1927–1949
[From cooperation to disintegration: on the relations between Long Yun and the central government,
1927–1949] (Taipei, Taiwan: Academia Historica, 2000).
37. LaRue R. Lutkins (U.S. vice consul in Kunming) to Acheson, March 16, 1949, NARA, RG 84,
China: Kunming Consulate, Classified General Records, 1944–49, 350/Yunnan.
38. Li, Li Zonghuang Huiyilu, 2:271–272.
39. CKSD, diary entries for August 20 and 27, 1949, Box 47.
40. CKSD, diary entry for August 20, 1949, Box 47.
41. Office of the Generalissimo, memorandum, August 12, 1949, TD / XW, vol. 62, no. 54097;
Executive Yuan, minutes of conference, September 9, 1949, AMFA-2, 019/42; Mongolian and Tibetan
Affairs Commission to Executive Yuan, memorandum, September 24, 1949, AMFA-2, 019/42.
42. CKSD, diary entries for August 26, 27, 28, 29, and 30, 1949, Box 47; Strong to Acheson, August
28, 1949, NARA, RG 59, 893.00/8–2849; Ralph Stevenson to Foreign Office, September 20, 1949, FO
371/75733 F14296.
43. CKSD, diary entries for August 31 and September 2, 1949, Box 47; Yu Jishi to Yu Chengwan,
September 4, 1949, CB, 10–0991; Chiang to Yu Chengwan, September 5, 1949, CB, 10–1000.
 44. See Shen Zui, Wo de Tewu Shengya [My espionage career] (Beijing: Zhongguo Wenshi
chubanshe, 2005), 288–291.
45. CKSD, diary entries for September 3, 4, and 5, 1949, Box 47; Zhou, Jianggong yu Wo, 123–
124; Lutkins to Acheson, top secret, September 6, 1949, NARA, RG 84, 350/Yunnan.
46. CKSD, diary entries for September 7 and 8, 1949, Box 47; Report submitted by Zhang Qun to
Chiang concerning Yunnan, January 6, 1950, in Zhonghua Minguo Zhongyao Shiliao Chubian, 7 (2),
959–963.
47. Foreign Office, monthly summary of foreign political developments, September 1949, FO
370/1933/L5649; Lutkins to Acheson, September 13, 1949, RG 84, 350/Yunnan; A. Doak Barnett,
China on the Eve of Communist Takeover (New York: Praeger, 1963), 290.
48. CKSD, diary entries for September 10, 17, and 24, 1949, Box 47.
49. MacDonald to Acheson, September 7, 1949, no. 894A.00/9–749; State Department,
“Deteriorating Situation in Formosa,” memorandum, September 9, 1949, no. 894A.00/9–949, Formosa
1945–1949, reel 2.
50. MacDonald to Acheson, September 8, 1949, no. 894A.00/9–849, Formosa 1945–1949, reel 2.
51. CKSD, diary entry for October 5, 1949, Box 47.
52. CKSD, diary entry for October 16, 1949, Box 47.
53. MacDonald to Acheson, November 6, 1949, no. 894A.20/11–649; MacDonald to Acheson,
November 9, 1949, no. 894A.20/11–949, Formosa 1945–1949, reel 3. See also Tucker, ed., China
Confidential, 74.
54. CKSD, diary entry for November 3, 1949, Box 47.
55. V. K. Wellington Koo, Gu Weijun Huiyilu [The memoirs of V. K. Wellington Koo] (Beijing:
Zhonghua Shuju, 1988), 7:530–531; K. C. Wu, Cong Shanghai Shizhang dao Taiwan Shengzhuxi,
1946–1953 [From Shanghai mayor to Taiwan provincial governor, 1946–1953] (Shanghai: Shanghai
renmin chubanshe, 1999), 95–99.
56. Zhou, Jianggong yu Wo, 143–147.
57. MacDonald to Acheson, top secret, November 29, 1949, no. 894A.20/11–2949, Formosa 1945–
1949, reel 3.
58. Office of Intelligence Research, State Department, “Estimate of the Political, Economic, and
Military Position of M.D.A.P.,” Part 2: “The Far East,” OIR Report no. 5178.2, March 8, 1950,
O.S.S./State Department Intelligence and Research Reports VIII: Japan, Korea, Southeast Asia,
and the Far East Generally: 1950–1961 Supplement, ed. Paul Kesaris (Washington, DC: University
Publications of America, 1977), microfilm, reel 1.
59. CKSD, diary entries for November 30 and December 3, 1949, Box 47.
60. Tong and Li, The Memoirs of Li Tsung-jen, 544–545; Robert Strong to Acheson, November 15,
1949, NARA, RG 59, 893.00/11–1549; Foreign Office, monthly summary of foreign political
developments, November 29, 1949, FO 370/1933/L6291.
61. Bai Hongliang to Chiang Kai-shek, “Bandit suppression operations in Sichuan,” November 21,
1949, TD / ZJX, no. 54329.
62. CKSD, diary entries for November 18 and 24, 1949, Box 47.
63. CKSD, diary entries for December 1 and 2, 1949, Box 47; Chiang, “Weiji Cunwang zhi Qiu,”
267–270.
64. Lutkins to Acheson, November 15, 1949, NARA, RG 84, 350/Yunnan. See also Tucker, ed.,
China Confidential, 67–68.
65. Lutkins to Acheson, November 21, 1949, NARA, RG 84, 350/Yunnan.
 66. Acheson to Lutkins, November 22, 1949, NARA, RG 84, 350/Yunnan.
67. Lutkins to Acheson, November 28, 1949, NARA, RG 84, 350/Yunnan.
68. CKSD, diary entries for December 9 and 10, 1949, Box 47; Lutkins to Acheson, December 10,
1949, NARA, RG 84, 350/Yunnan; Foreign Office, monthly summary of foreign political developments,
December 1949, FO 370/1933/L5649.
69. Zhou, Jianggong yu Wo, 159–162; Li Yu, Yuan Yunhua, and Fei Xianghao, eds., Xinan Yiju: Lu
Han Liu Wenhui Qiyi Jishi [The righteous act in the Southwest: a record of Lu Han and Liu Wenhui’s
righteous revolution] (Chengdu, China: Sichuan renmin chubanshe, 1987), 184–194.
70. CKSD, diary entries for December 9 and 10, 1949, Box 47; Chiang to He Guoguang, December
13, 1949, CB, 10–1054; Chiang to Hu Zongnan, December 13, 1949, CB, 10–1058.
71. CKSD, diary entry for December 10, 1949, Box 47.
 CHAPTER 6 ▪ Floating State, Divided Strategy
1. CKSD, diary entry for December 4, 1949, Box 47.
2. See 6th Division of the KMT Director-General’s Office, confidential report, December 20, 1949,
TD/XW, vol. 62, no. 54067; Guang Lu and Abdullah to Chiang Kai-shek, report, January 4, 1950,
TD/XW, vol. 62, no. 54119.
3. Wu, Ye Lailin, 259.
4. Chen Cheng, Chen Cheng Xiansheng Huiyilu, 1:86–89.
5. Donald Edgar (U.S. consul-general in Taipei) to Dean Acheson, December 14, 1949, no.
894A.00/12–1449; Edgar to Acheson, December 16, 1949, no. 894A.00/12–1649, Formosa 1945–
1949, reel 3.
6. The military attaché then sought advice from Washington’s military quarters. See Office of the
U.S. Military Attaché in Taipei to U.S. Department of Army, top secret, January 5, 1950, ROCA, reel
14.
7. Robert Strong to Dean Acheson, March 3, 1950, no. 794A.00(W)/3–350, Formosa 1950–1954,
reel 2; Tong and Li, The Memoirs of Li Tsung-jen, 553–554.
8. Ibid., 554–555; CKSD, diary entries for March 2 and 3, 1950, Box 48.
9. See Tucker, ed., China Confidential, 75.
10. The story was first revealed by Koo to Chiang Ching-kuo when the latter visited the United
States in October 1953. See CKSD, diary entry for October 23, 1953, Box 50.
11. Strong to Acheson, March 11, 1950, no. 794A.00(W)/3–1150, Formosa 1950–1954, reel 2;
CKSD, diary entries for March 4 and 6, 1950, Box 48.
12. For K. C. Wu’s complains about his difficult position in the Taiwan provincial government, See
Wu, Cong Shanghai Shizhang dao Taiwan Shengzhuxi, 113–117.
13. CKSD, diary entries for March 4 and 11, 1950, Box 48.
14. Strong to Acheson, April 25, 1950, no. 794A.00/4–2550, Formosa 1950–1954, reel 1.
15. See General Sun Liren, daily work reports, March 27, April 7, 8, and 11, 1950, in Shen Keqin
Papers, Box 3.
16. Strong to Acheson, April 23, 1950, no. 794A.00(W)/4–2350, Formosa 1950–1954, reel 2.
17. Strong to Acheson, March 26, 1950, no. 794A.00(W)/3–2650, Formosa 1950–1954, reel 2.
18. See Strong to Acheson, March 8, 1950, no. 794A.11/3–850; Strong to Acheson, March 10, 1950,
no. 794A.11/3–1050, Formosa 1950–1954, reel 3.
19. Wu, Ye Lailin, 260.
20. According to the CIA, by the fall of 1949, the total Communist “Hainan Column” under Feng
Baiju amounted to approximately 10,300, including six divisions. See CIA Information Report entitled
“Chinese Communist Organization on Hainan,” September 15, 1949, CIA Research Reports: China,
1946–1976, reel 1. According to Feng’s own report to the CCP around that time, the column forces
numbered 13,000, including 5,000 combat forces and 8,000 logistical personnel. See “Report on the
military activities of the Hainan Column,” December 1949, in Guangdong Geming Lishi Wenjian
Huiji, vol. 48, 541–564.
21. Zhang Fakui, Jiang Jieshi yu Wo, 457–458.
22. Westad, Decisive Encounters, 285–287; Huang Hsiang-yu, ed., Fuguo Dao Liu Yue Guojun
Shiliao Huibian [Collection of historical documents on Nationalist army in Phu Quoc Island, Vietnam]
(Taipei, Taiwan: Academia Historica, 2006), 1:382–383.
 23. CIA, “Offer by Chen Chi-tang to Turn Over Hainan,” memorandum, January 1950, CIA
Research Reports: China, 1946–1976, reel 1. See also Evan Thomas, The Very Best Men: The
Daring Early Years of the CIA (New York: Simon & Schuster, 2006), 50–51.
24. Chen Jitang to William Knowland, letter, January 16, 1950, enclosed in Knowland to Walter Judd,
February 7, 1950, Walter H. Judd Papers, Hoover Institution Archives, Box 163.
25. Gan Jiehou to State Department, January 4, 1950, no. 794A.00/1–450, Formosa 1950–1954,
reel 1.
26. “Free China Labor Union schedule for the first stage,” January 1950, CRCA, 6–4.1/85,
microfilm, reel 4.
27. General Gu Zhutong to Chiang Kai-shek, draft plan, January 31, 1950, TD/JMBZ, vol. 102, no.
58103.
28. See CCP Party Committee of the Hainan District, “Directives for the Current Urgent Tasks,”
March 9, 1950, in Guangdong Geming Lishi Wenjian Huiji, 48:580–581. Similar observations can be
found in the CIA intelligence report of this time: “Prediction and Cause of Unrest in Kwangtung
Province,” February 8, 1950, CIA Research Reports: China, 1946–1976, reel 1 and “Nationalist and
Communist Order of Battle and Military Information, South China,” February 25, 1950, CIA Research
Reports: China, 1946–1976, reel 1.
29. CIA, “Nationalist Naval Forces, Hainan,” March 6, 1950, CIA Research Reports: China,
1946–1976, reel 1; CIA, “Communist Landings, Hainan,” March 5–7, 1950, CIA Research Reports:
China, 1946–1976, reel 1; CIA, “Situation in Hainan: Supply of Nationalist Guerrillas, China
Mainland,” March 1950, CIA Research Reports: China, 1946–1976, reel 1.
30. British Consulate in Tamsui to Foreign Office, “Political Report: Summary of Events in Formosa
during the month of March, 1950,” April 5, 1950, in Taiwan Political and Economic Reports 1861–
1960, ed. Jarman, 9:97–98; CIA, “Situation, Hainan,” March 20, 1950, CIA Research Reports: China,
1946–1976, reel 1.
31. CIA, “Communist Landings, Hainan,” March 25–April 5, 1950, CIA Research Reports: China,
1946–1976, reel 1; CIA, “Communist Military Losses in Preliminary Landings, Hainan Island,” March
6–April 10, 1950, CIA Research Reports: China, 1946–1976, reel 1.
32. Policy Information Committee of the State Department, memorandum, April 12, 1950, in Dennis
Merrill, ed., Documentary History of the Truman Presidency, vol. 32, The Emergence of an Asian
Pacific Rim in American Foreign Policy: The Philippines, Indochina, Thailand, Burma, Malaya,
and Indonesia (Frederick, MD: University Publications of America, 2001), 208–209.
33. John W. Garver, The Sino-American Alliance: Nationalist China and American Cold War
Strategy in Asia (New York: M.E. Sharpe, 1997), 15–21.
34. See, for example, Peter Lowe, The Origins of the Korean War, 2nd ed. (London: Longman,
1997), 130–136.
35. John Lewis Gaddis, “The Strategic Perspective: The Rise and Fall of the ‘Defensive Perimeter’
Concept, 1947–1951,” in Uncertain Years: Chinese-American Relations, 1947–1950, ed. Dorothy
Borg and Waldo Heinrichs (New York: Columbia University Press, 1980), 82–84; Robert Accinelli,
Crisis and Commitment: United States Policy toward Taiwan, 1950–1955 (Chapel Hill: The
University of North Carolina Press, 1996), 11–12.
36. Butterworth to Acheson, “Memorandum Respecting Formosa,” top secret, December 16, 1949,
no. 894A.00/12–1649, Formosa 1945–1949, reel 1.
37. Dean Acheson, Present at the Creation: My Years in the State Department (New York: W.
W. Norton, 1969), 349–353.
 38. Acheson to Edgar, top secret, December 30, 1949, NARA, RG 59, 711.94A/12–3049. See also
Accinelli, Crisis and Commitment, 12.
39. See Gordon Chang, Friends and Enemies: The United States, China, and the Soviet Union,
1948–1972 (Stanford, CA: Stanford University Press, 1990), 62; Nancy B. Tucker, Taiwan, Hong
Kong, and the United States, 1945–1992: Uncertain Friendship (New York: Twayne, 1994), 29–
30; Lowe, The Origins of the Korean War, 136–137.
40. Donovan, Tumultuous Years, 86–88; Lowell Thomas, History As You Heard It (New York:
Doubleday, 1957), 371.
41. Tucker, ed., China Confidential, 18; Victor S. Kaufman, Confronting Communism: U.S. and
British Policies toward China (Columbia: University of Missouri Press, 2001), 20–30.
42. Robert Strong, minutes of conversation with Nationalist foreign minister George Yeh, January 9,
1950, TD/DMW, vol. 7, no. 54541.
43. Chen, Chen Cheng Xiansheng Huiyilu, 1:90–92. See also Wu, Cong Shanghai Shizhang dao
Taiwan Shengzhuxi, 130–132.
44. Ong, “A Formosan’s View of the Formosan Independence Movement,” 107–114; Mendel, The
Politics and Formosan Nationalism, 146–161.
45. Chen Zhengmao, “Liao Wenyi yu Taiwan Zaijiefang Lianmeng” [Liao Wenyi and the Formosa
League for Re-emancipation], Zhuangji Wenxue (Biographical Literature), 94, no.1 (2009), 7–8.
46. Sebald to John M. Allison (deputy director, Division of Far Eastern Affairs, State Department),
February 9, 1949, no. 894A.01/2–949, Formosa 1945–1949, reel 3.
47. Sebald to Allison, intelligence summary no. 2370, top secret, March 11, 1949, no. 894A.01/3–
1149, Formosa 1945–1949, reel 3.
48. The Philippines Consul-General in Hong Kong Mariano Ezpeleta had shown particular
enthusiasm about supporting the FLR. He invited Liao to visit Manila and promised to pull the league
closer to his country. See R. M. Service (U.S. vice consul in Hong Kong) to State Department, May 15,
1949, no. 894A.01/3–1549, Formosa 1945–1949, reel 3.
49. Clark to State Department, May 11, 1949, no. 894A.01/5–1149, Formosa 1945–1949, reel 3.
50. MacDonald to State Department, August 16, 1949, no. 894A.01/8–1649, Formosa 1945–1949,
reel 3.
51. MacDonald to State Department, August 5, 1949, no. 894A.01/8–549, Formosa 1945–1949,
reel 3.
52. Thomas Liao to Philip Jessup, “Recommendation for Disposing of Formosa under the Present
Circumstances,” September 2, 1949, no. 894A.00/9–249, Formosa 1945–1949, reel 1.
53. MacDonald to State Department, November 19, 1949, no. 894A.00/11–1949, Formosa 1945–
1949, reel 1.
54. Donald Edgar to State Department, transmission of a memorandum of conversation, January 5,
1950, no. 794A.00/1–550, Formosa 1950–1954, reel 1.
55. W. E. Nelson to Edgar, memorandum, January 6, 1950, no. 794A.00/1–650, Formosa 1950–
1954, reel 1.
56. Strong to State Department, “Relations of D. L. Osborn with Formosa League for Re-
emancipation,” memorandum, July 14, 1950, no. 794A.00/7–1450, Formosa 1950–1954, reel 1.
57. Strong to State Department, January 13, 1950, no. 794A.00/1–1350, Formosa 1950–1954, reel
1.
58. Strong to State Department, January 26, 1950, no. 794A.00/1–2650, Formosa 1950–1954, reel
1.
 59. Strong to State Department, February 8, 1950, no. 794A.00/2–850, Formosa 1950–1954, reel 1.
60. Strong to State Department, February 22, 1950, no. 794A.00/2–2250, Formosa 1950–1954, reel
1; Strong to State Department, March 10, 1950, 794A.00/3–1050, Formosa 1950–1954, reel 1; Strong
to State Department, March 11, 1950, no. 794A.00(W)/3–1150, Formosa 1950–1954, reel 3.
61. CKSD, diary entry for January 17, 1950, Box 48.
62. Strong to State Department, March 18, 1950, no. 794A.00/3–1850, Formosa 1950–1954, reel 1.
63. Strong to State Department, April 9, 1950, no. 794A.00/4–950, Formosa 1950–1954, reel 1.
64. Strong to State Department, April 4, 1950, no. 794A.00/4–450, Formosa 1950–1954, reel 1.
65. CKSD, diary entry for June 2, 1950, Box 48; Strong to State Department, June 2, 1950, no.
794A.00/6–250, Formosa 1950–1954, reel 1.
66. Lloyd E. Eastman, Seeds of Destruction: Nationalist China in War and Revolution, 1937–
1949 (Stanford, CA: Stanford University Press, 1984), 311.
67. Qin Xiaoyi, ed., Zongtong Jianggong Dashi Changbian Chugao [The preliminary draft of
collected materials describing the activities of President Chiang Kai-shek], vol. 9 (Taipei, Taiwan: KMT
Historical Committee, 2002), 2.
68. CKSD, diary entries for January 3, 21, February 3, and May 18, 1950, Box 48.
69. Li Songlin, Jiang Jieshi de Taiwan Shidai [Chiang Kai-shek’s time in Taiwan] (Taipei, Taiwan:
Fengyun Shidai, 1993), 108–112; CKSD, diary entries for May 30, 31, and June 1, 1950, Box 48.
70. Chiang Kai-shek to Hu Zongnan, January 2, 1950, TD/YZ/1950, no. 75716; Chiang to Hu,
January 3, 1950, TD/YZ/1950, no. 75718; Donald Edgar to State Department, January 2, 1950, no.
794A.00(W)/1–250, Formosa 1950–1954, reel 3.
71. Chiang Kai-shek to Wang Shuming (deputy commander-in-chief of the Nationalist Air Force),
January 3, 1950, TD/YZ/1950, no. 75717; Chiang to Wang, January 3, 1950, TD/YZ/1950, no. 75719;
Strong to State Department, January 16, 1950, no. 794A.00(W)/1–1650, Formosa 1950–1954, reel 3.
72. Chiang Kai-shek to Luo Lie, January 20, 1950, TD/YZ/1950, no. 75721; CKSD, diary entry for
January 25, 1950, Box 48.
73. Chiang Kai-shek to Hu Zongnan, March 25, 1950, TD/YZ/1950, no. 75732.
74. State Department, “Danger that Chinese Communist Troops may Enter Burmese Territory,”
memorandum, July 1, 1950, NARA, RG 59, 790B.00/7–150; Dean Acheson to Robert Strong, July 28,
1950, 790B.00/7–2850.
75. Ministry of National Defense, “Report on the retreat of Nationalist troops into Vietnam and its
handling in the aftermath,” July 1, 1950, in Huang, ed., Fuguo Dao Liu Yue Guojun Shiliao Huibian,
1:30–35.
76. Ibid., 32–33; Strong to State Department, January 10, 1950, no. 794A.00(W)/1–1050, Formosa
1950–1954, reel 3; Strong to State Department, April 22, 1950, no. 794A.00/4–2250, Formosa 1950–
1954, reel 1.
77. For more about the Communist Chinese support for Ho Chi Minh in the early 1950s, see Zhai
Qiang, China and the Vietnam Wars, 1950–1975 (Chapel Hill: The University of North Carolina
Press, 2000), 10–42.
78. King C. Chen, Vietnam and China, 1938–1954 (Princeton, NJ: Princeton University Press,
1969), 203–208.
79. Division of Research for Far East, State Department, Intelligence Report IR 5809, “Indochina
Background Brief,” by February 11, 1952, in Kesaris, ed., O.S.S./State Department Intelligence and
Research Reports VIII, reel 1; Huang Jie, “Huang Jie Zishu” [Huang Jie’s own account], Zhuanji
Wenxue [Biographical Literature] (Taipei), 38, no. 3 (1981), 33–42.
 80. Bai Chongxi to Chiang Kai-shek, February 7, 1950, in Huang, ed., Fuguo Dao Liu Yue Guojun
Shiliao Huibian, 1:11–17.
81. Foreign Ministry to Executive Yuan, top secret, April 12, 1950, AMFA-1, 172–1/0591.
82. CKSD, diary entry for March 28, 1950, Box 48; Strong to State Department, March 16, 1950, no.
794A.00/3–1650, Formosa 1950–1954, reel 1.
83. Strong to State Department, January 20, 1950, no. 794A.5/1–2050, Formosa 1950–1954, reel 4.
The figures were revealed to Robert Strong by Ren Xianqun, K. C. Wu’s provincial finance
commissioner. See also Wu, Cong Shanghai Shizhang dao Taiwan Shengzhuxi, 115–117.
84. Strong to State Department, February 18, 1950, no. 794A.00(W)/2–1850, Formosa 1950–1954,
reel 3.
85. CKSD, diary entries for March 30 and 31, 1950, Box 48. Similar evaluation was given by the
intelligence chiefs in the State Department, who predicted that the gold stocks Chiang possessed would
not last beyond October 1950. See State Department Policy Information Committee memorandum, April
12, 1950, in Merrill, ed., Documentary History of the Truman Presidency, 32:210.
86. Qin, ed., Zongtong Jianggong Dashi Changbian Chugao, 9:59; British Consulate in Tamsui to
Foreign Office, “Summary of Events in Formosa during the month of March, 1950,” April 5, 1940, in
Taiwan Political and Economic Reports 1861–1960, ed. Jarman, 9:97–98.
87. CIA, “Situation, Hainan,” March 20, 1950, in CIA Research Reports: China, 1946–1976, reel
1.
88. Strong to State Department, April 10, 1950, no. 794A.00/4–1050, Formosa 1950–1954, reel 1.
 CHAPTER 7 ▪ U.S. Military and Security Policy Goes Underground
1. William Pawley to Acheson, memorandum, November 7, 1949, Charles M. Cooke Papers, Hoover
Institution Archives, Stanford University, Box 26.
2. Acheson to John MacDonald, top secret, telegram, November 18, 1949, no. 894A.20/11–1849,
Formosa 1945–1949, reel 3.
3. CKSD, diary entry for November 15, 1949, Box 47.
4. State Department, “Shipments of Military Materiel to Formosa and Status of Equipment on
Island,” top secret memorandum, January 3, 1950, no. 794A.5/1–350, Formosa 1950–1954, reel 4.
5. U.S. Embassy in Manila to State Department, April 19, 1950, no. 794A.56/4–1950, Formosa
1950–1954, reel 4.
6. Strong to Acheson, January 30, 1950, no. 794A.00/1–3050, reel 1; State Department, office
memorandum, February 2, 1950, no. 794A.551/2–250, Formosa 1950–1954, reel 4.
7. CKSD, diary entries for January 31 and February 1 and 16, 1950, Box 48.
8. Strong to Dean Acheson, February 1, 1950, in ROCA, reel 20.
9. Strong to State Department, January 31, 1950, no. 794A.00/1–3150, Formosa 1950–1954, reel 1;
State Department, “Visits by Air Force Intelligence Personnel to Taiwan,” memorandum of
conversation, February 2, 1950, no. 794A.5511/2–350, Formosa 1950–1954, reel 4.
10. On August 21, 1950, at a dinner party held by the Nationalist Chinese Mission in Tokyo, Major
Vanderpuyl handed Lester K. Little, the recently retired inspector general of the Chinese Maritime
Customs Service, an envelope addressed to General He Shili, head of the Chinese Mission, remarking
that Little might be interested in the contents. To Mr. Little’s astonishment, the envelope contained an
official copy of a classified State Department telegram from Taipei, bearing a handwritten notation to
the effect that “here is what those State Department people are thinking.” The telegram in question was
from Robert Strong to the State Department, sent around early August 1950, in which Strong stated that
no real changes had been produced by Chiang Kai-shek’s recent party reforms. When Lester Little
later arrived in Taiwan, he revealed the matter to Karl Rankin, who succeeded Strong as U.S. chargé
d’affaires in Taipei. See Rankin to State Department, September 5, 1950; H. Freeman Matthews
(deputy under secretary of state) to Major General James H. Burns (Office of the Secretary of
Defense), September 11, 1950; and O. Edmund Clubb to Rankin, March 21, 1951, in ROCA, reel 20.
11. Frederick E. Nolting Jr. (Office of the Deputy Under Secretary of State) to Troy L. Perkins
(acting director for Chinese affairs), June 28, 1951; Perkins to Rankin, July 1951, ROCA, reel 20.
12. General Zhu Shiming (head of the Chinese Mission in Japan) to Foreign Ministry, February 2,
1950, TD / DMW, vol. 7, no. 54506.
13. Strong to State Department, February 24, 1950, no. 794A.00(W)/2–2450, Formosa 1950–1954,
reel 3.
14. See Maochun Yu, OSS in China: Prelude to Cold War (New Haven, CT: Yale University
Press, 1996), 256–260; Nancy Bernkopf Tucker, Patterns in the Dust: Chinese-American Relations
and the Recognition Controversy, 1949–1950 (New York: Columbia University Press, 1983), 91.
15. See Edward J. Marolda, “The U.S. Navy and the ‘Loss of China’, 1945–1950,” in Larry I.
Bland, ed., George C. Marshall’s Mediation Mission to China: December 1945–January 1947, ed.
Larry I. Bland (Lexington, VA: George C. Marshall Foundation, 1998), 409–420.
16. K. C. Shah (aide, Office of the President, Republic of China) to Cooke, March 25, 1950, Charles
M. Cooke Papers, Box 2; Cooke, “How Formosa Was Dropped but Did Not Fall,” personal
memorandum, ca. 1953, Charles M. Cooke Papers, Box 11.
 17. A. E. Gates of Commerce International China to Cooke, memorandum, December 6, 1954,
Charles M. Cooke Papers, Box 26.
18. John Lewis Gaddis, “Defensive Perimeter Concept, 1947–1951,” in Uncertain Years: Chinese-
American Relations, 1947–1950, eds. Dorothy Borg and Waldo Heinrichs (New York: Columbia
University Press, 1980), 88–89; Peter Dale Scott, Drugs, Oil, and War: The United States in
Afghanistan, Colombia, and Indochina (New York: Rowman & Littlefield, 2003), 109–117.
19. “Internal Security,” copy of transcript of the Congressional Hearing on Admiral Charles M.
Cooke, dated October 19, 1951, Alfred Kohlberg Papers, Hoover Institution Archives, Stanford
University, Box 42.
20. K. C. Shah to Cooke, April 7, 1950, Charles M. Cooke Papers, Box 2.
21. Lt. Col. Carl Poston (assistant army attaché in Taipei), “Irving Ritchie Short,” memorandum,
August 14, 1950, no. 794A.022/8–1450, Formosa 1950–1954, reel 4.
22. Jiang Biao to James A. Gray (executive vice president, CIC), April 4, 1950, Charles M. Cooke
Papers, Box 26.
23. Agreement between the Board of Supplies, Executive Yuan (ROC) and Commerce International
China, Incorporated, April 10, 1950, Charles M. Cooke Papers, Box 26; Jiang Biao to Cooke, April 15,
1950, Charles M. Cooke Papers, Box 26. Hsu Po-lin, a retired colonel who was serving in the ROC
Armed Forces around 1950 and 1951, recalled that Cooke and his team members were very active in
the Nationalist military forces. They were so energetically supervising training programs and evaluating
military drills that even soldiers at the very bottom of the military hierarchy were aware of their
presence and activities. Hsu Po-lin, interview with author, May 25, 2007.
24. Cooke to Knowland, April 10, 1950, Charles M. Cooke Papers, Box 4.
25. General Sun Liren, daily work reports, April 7 and 11, 1950, Shen Keqin Papers, Box 3.
26. Strong to State Department, March 29, 1950, no. 794A.56/3–2950; U.S. Embassy in Manila to
State Department, April 19, 1950, no. 794A.56/4–1950, Formosa 1950–1954, reel 4.
27. U.S. Embassy in London to State Department, April 1, 1950, no. 794A.56/4–150; Dean Acheson
to U.S. Embassy in Manila, April 1, 1950, no. 794A.56/4–150; U.S. Embassy in Manila to State
Department, April 19, 1950, no. 794A.56/4–1950, Formosa 1950–1954, reel 4.
28. Department of Defense memorandum entitled “AV Gas to Chinese Nationalist Government,
Formosa,” March 7, 1950, NARA, RG 330, Records of the Secretary of Defense, Records of the
Office of the Assistant Secretary of Defense (330.6), Box 50.
29. Cooke to Fassoulis, April 14, 1950, Charles M. Cooke Papers, Box 26; Fassoulis to James Gray
(executive president of CIC), June 10, 1950, Charles M. Cooke Papers, Box 26.
30. Cooke to Forrest Sherman, letter, April 14, 1950, Charles M. Cooke Papers, Box 8; “Basis of
request by the Chinese Government April 1950 for Transfer of Surplus U.S. Vessels and Boats to China
as authorized in U.S. Public Law 512,” memorandum by Cooke, April 1950, Charles M. Cooke Papers,
Box 35.
31. Strong to State Department, May 12, 1950, no. 794A.00(W)/5–1250, Formosa 1950–1954, reel
2.
32. Sherman to Cooke, May 3, 1950, Charles M. Cooke Papers, Box 8; Cooke to Chiang Kai-shek,
memorandum, June 10, 1950, Charles M. Cooke Papers, Box 26; Strong to State Department, June 24,
1950, no. 794A.00(W)/6–2450, Formosa 1950–1954, reel 2.
33. Cooke to Chiang Kai-shek, memorandum, June 10, 1950, Charles M. Cooke Papers, Box 26.
34. James Gray to Cooke, June 21, 1950; Fassoulis to Gray, June 24, 1950, Charles M. Cooke
Papers, Box 26.
 35. Broadcasting Corporation of China to Chiang Kai-shek, confidential proposal, March 23, 1950,
TD/YZ/1950, no.75733; Zhou Zhirou (chief of general staff) to Chiang Kai-shek, April 14, 1950,
TD/JMBZ, no. 58086.
36. General Shi Jue (commander of Nationalist forces in Zhoushan) to Chiang Kai-shek, April 2,
1950, TD/JMBZ, no. 58083.
37. Cooke to MacArthur, May 2, 1950, Charles M. Cooke Papers, Box 6; Cooke’s memorandum for
the record, May 1, 1950, Charles M. Cooke Papers, Box 33.
38. Cooke to Chiang Kai-shek, “Choushan Situation,” memorandum, April 29, 1950, Charles M.
Cooke Papers, Box 2.
39. Strong to State Department, May 17, 1950, no. 794.00/5–1750, Formosa 1950–1954, reel 2.
40. G-3, Ministry of National Defense to Chiang Kai-shek, confidential report, May 5, 1950, TD /
JMBZ, vol. 101, no. 58076.
41. CKSD, diary entries for April 30 and May 1, 3, 7, 8, 9, and 10, 1950, Box 48; Strong to State
Department, May 16, 1950, no. 794A.00/5–1650; Strong to State Department, May 18, 1950, no.
794A.61/5–1850, Formosa 1950–1954, reel 1.
42. Cooke to Chiang Kai-shek, “Choushan Plan,” memorandum, May 10, 1950, Charles M. Cooke
Papers, Box 2; General Shi Jue to Chiang, May 14, 1950, TD/JMBZ, vol. 101, no. 58080; General Wang
Shuming to Chiang, May 16, 1950, TD/JMBZ, vol. 101, no. 58081.
43. British Consulate in Tamsui to Foreign Office, March 19, 1950, FO 371/83297 FC 1016/41;
Strong to State Department, March 11, 1950, no. 794A.00(W)/3–1150, Formosa 1950–1954, reel 2.
44. Strong to State Department, April 10, 1950, no. 794A.00/4–1050; Strong to State Department,
April 22, 1950, no. 794A.00/4–2250, Formosa 1950–1954, reel 1.
45. Strong to State Department, April 25, 1950, no. 794A.00/4–2550, Formosa 1950–1954, reel 1;
Associated Press news release submitted for Chiang’s reference, April 25, 1950, TD/JMBZ, vol. 102,
no. 58102.
46. CKSD, diary entry for April 25, 1950, Box 48; Strong to State Department, April 28, 1950, no.
794A.00(W)/4–2850, Formosa 1950–1954, reel 3.
47. Cooke to MacArthur, April 27, 1950, Charles M. Cooke Papers, Box 6. A witness account of the
KMT’s last battle for Hainan can also be found in Seymour Topping, On the Front Lines of the Cold
War: An American Correspondent’s Journal from the Chinese Civil War to the Cuban Missile
Crisis and Vietnam (Baton Rouge: Louisiana State University Press, 2010), 111–121.
48. Cooke to Chiang Kai-shek, “Comments on the Hainan Battle,” memorandum, April 23, 1950,
Charles M. Cooke Papers, Box 2; Cooke to Chiang Kai-shek, memorandum, April 23, 1950, TD/JMBZ,
vol. 102, no. 58120.
49. Chinese Embassy in Washington to Chiang Kai-shek, May 4, 1950, TD / GQX, vol. 4, no. 59679.
50. Knowland to Cooke, May 8 and June 20, 1950, Charles M. Cooke Papers, Box 4; Cooke to
Knowland, May 23, 1950, Charles M. Cooke Papers, Box 4; Cooke to Knowland and Walter Judd, June
16, 1950, Walter H. Judd Papers, Box 164.
51. Knowland to Cooke, May 8, 1950, Charles M. Cooke Papers, Box 4.
52. Strong to State Department, May 12, 1950, no. 794A.00(W)/5–1250, Formosa 1950–1954, reel
2.
53. U.S. Consulate General in Taipei, “To American Citizens in Taiwan,” May 22, 1950, Walter H.
Judd Papers, Box 164; Strong to State Department, May 26, 1950, no. 794A.00(W)/5–2650, Formosa
1950–1954, reel 2.
 54. Strong to State Department, May 18, 1950, no. 794A.551/5–1850, Formosa 1950–1954, reel 4;
A. E. Cates, Jr. (lieutenant commander, USNR) to Charles M. Cooke, memorandum, May 20, 1950,
Walter H. Judd Papers, Box 164.
55. Chennault to Knowland, June 12, 1950, Charles M. Cooke Papers, Box 33.
56. Cooke to Louis Johnson, May 1950, Charles M. Cooke Papers, Box 33; A Brief Report on the
Evacuation of Hai-nan and Chow-San Islands, memorandum by Cooke, May 1950, Charles M.
Cooke Papers, Box 33.
57. Cooke to Knowland, May 23, 1950, Charles M. Cooke Papers, Box 4; Cooke to Forrest
Sherman, May 23, 1950, Charles M. Cooke Papers, Box 8.
58. Bruce Cumings, The Origins of the Korean War, vol. 2, The Roaring of the Cataract, 1947–
1950 (Princeton, NJ: Princeton University Press, 1990), 526–528.
59. Strong to State Department, May 19, 1950, no. 794A.00(W)/5–1950, Formosa 1950–1954, reel
2; Memorandum from Charles Cooke to Walter Judd, May 20, 1950, Walter H. Judd Papers, Box 164.
60. Strong to Philip D. Sprouse, top secret telegram, May 26, 1950, ROCA, reel 14.
61. Cooke to McArthur, letter, April 1950, Charles M. Cooke Papers, Box 2; CKSD, diary entry for
April 7, 1950, Box 48.
62. C. L. Shulzberger, A Long Row of Candles: Memories and Diaries, 1934–1954 (New York:
Macmillan, 1969), 687–688.
63. Cooke to Knowland, May 23, 1950, Charles M. Cooke Papers, Box 4; CKSD, diary entry for
May 24, 1950, Box 48.
64. MacArthur to the Department of Army, May 29, 1950, quoted in Lowe, The Origins of the
Korean War, 175. See also Chen Jian, China’s Road to the Korean War: The Making of the Sino-
American Confrontation (New York: Columbia University Press, 1994), 117–119.
65. Accinelli, Crisis and Commitment, 25–26.
66. Philip Jessup (ambassador at large), memorandum of conversation, top secret, June 26, 1950,
FRUS 1950, vol. 7, Korea, 180.
67. CKSD, diary entry for May 24, 1950, Box 48. The story of Karl W. V. Nix’s trip to Taipei and his
meeting with Chiang remain open to further scrutiny.
68. State Department, memorandum, top secret, March 1950, in ROCA, reel 14.
69. Office of the Secretary of State to Windsor Hackler of the Bureau of Far Eastern Affairs, top
secret, April 27, 1950, no. 794A.5/4–2750, Formosa 1950–1954, reel 4.
70. State Department, memorandum entitled “Hypothetical Development of the Formosan Situation,”
top secret, May 3, 1950, no. 793.00/5–350, Formosa 1950–1954, reel 1. See also Thomas J.
Schoenbaum, Waging Peace and War: Dean Rusk in the Truman, Kennedy, and Johnson Years
(New York: Simon & Schuster, 1988), 209; Leonard A. Kusnitz, Public Opinion and Foreign Policy:
America’s China Policy, 1949–1979 (Westport, CT: Greenwood, 1984), 33.
71. State Department, memorandum on Formosa, top secret, May 31, 1950, no. 794A.00/5–3150,
Formosa 1950–1954, reel 1.
72. Rusk to Acheson, top secret memorandum, June 9, 1950, no. 794A.00/6–950, Formosa 1950–
1954, reel 1.
73. State Department, top secret memorandum, June 15, 1950, in ROCA, reel 15.
74. Ibid.
75. See The New York Times, editorial, April 27, 1950, in Julius Epstein Papers, Hoover Institution
Archives, Stanford University, Box 22.
 76. Ronald McGlothlen, Controlling the Waves: Dean Acheson and the U.S. Foreign Policy in
Asia (New York: W. W. Norton, 1993), 120–122. In the spring of 1950, a rumor that Hu Shi was
supported by the United States and would lead Free China was widely circulated among the so-called
Third Force elements in Hong Kong. See unpublished autobiographical writings of Thomas Tse-yu Yang,
chapter 17, Thomas Tse-yu Yang Papers, Hoover Institution Archives, Stanford University, Folder 1.
77. “Memorandum for Colonel Bayer: Paragraphs of Colonel Fortier’s report mentioned in General
Bradley’s message,” June 26, 1950, NARA, RG 218, Geographical File 1948–50, Entry: UD 7,
190:1/27/01.
78. CKSD, diary entry for June 5, 1950, Box 48.
79. Accinelli, Crisis and Commitment, 26; Cumings, The Origins of the Korean War, 2:540–543;
Michael D. Pearlman, Truman and MacArthur: Policy, Politics, and the Hunger for Honor and
Renown (Bloomington: Indiana University Press, 2008), 52–53.
80. Cooke to Judd, June 16, 1950, Walter H. Judd Papers, Box 96; CKSD, diary entries for June 13
and 20, 1950, Box 48.
81. William J. Sebald and Russell Brinan, With MacArthur in Japan: A Personal History of the
Occupation (New York: W. W. Norton, 1965), 122.
82. Douglas MacArthur, “Memorandum on Formosa,” June 14, 1950, NARA, RG 218, Geographical
File, 1948–50, Entry: UD 7, 190:1.
83. Sebald to State Department, June 22, 1950, no. 794A.00/6–2250, Formosa 1950–1954, reel 2.
84. For more about the “white terror” of Taiwan from the 1950s to the 1970s, see Lan Bozhou,
Baise Kongbu [The white terror] (Taipei, Taiwan: Yangzhi chubanshe, 1993) and Kang-yi Sun,
Journey through the White Terror: A Daughter’s Memoir (Taipei: National Taiwan University Press,
2006).
85. H. L. Grosskopf (special technical advisor) to Vice Admiral Gui Yongqing, memorandum, July 31,
1950, Charles M. Cooke Papers, Box 26.
86. Strong to State Department, August 5, 1950, no. 794A.00(W)/8–550, Formosa 1950–1954, reel
2. For more about MacArthur’s trip to Taiwan, see Chapter 8.
87. Karl L. Rankin, China Assignment (Seattle: University of Washington Press, 1964), 105–106.
88. State Department, “Military Advisory Personnel for Formosa,” office memorandum, January 20,
1951, no. 794A.5-MAP/1–2051; State Department, office memorandum, February 5, 1951, no. 794A.5-
MAP/2–551; State Department, office memorandum, February 13, 1951, no. 794A.5-MAP/2–1351,
Formosa 1950–1954, reel 4.
89. State Department, “Military Chain of Command on Formosa,” top secret office memorandum,
March 13, 1951, no. 794A.5-MAP/3–1351, Formosa 1950–1954, reel 4.
90. State Department, “Military Advisory Personnel for Formosa,” office memorandum, January 20,
1951, no. 794A.5-MAP/1–2051, Formosa 1950–1954, reel 4. H. Maclear Bate, Report from
Formosa (New York: E. P. Dutton, 1952), 162–164.
91. NARA, RG 218, Geographical File 1951–53, Entry: UD 13, 190: 1, “Memorandum by the Chief
of Staff on Establishment of a JUSMAG on Formosa,” March 7, 1951; Cooke to Commander Chester
F. Pinkerton, (member of the MAAG), memorandum, May 14, 1951, Charles M. Cooke Papers, Box 29;
Cooke to Chiang Kai-shek, memorandum, June 8, 1951, Charles M. Cooke Papers, Box 27.
92. Strong to State Department, July 8, 1950, no. 794A.00(W)/7–850, Formosa 1950–1954, reel 2;
Strong to State Department, August 4, 1950, no. 794A.56/8–450, Formosa 1950–1954, reel 4; Chen
Cheng to Chiang Kai-shek, confidential report, July 17, 1950, TD/MJY, vol. 47, no. 59077.
 93. CKSD, diary entries for June 29 and 30, and July 1, 2, and 3, 1950, Box 48; Chiang Ching-kuo to
Chiang Kai-shek, August 17, 1950, TD / DMW, vol. 8, no. 59312.
94. Strong to State Department, July 25, 1950, no. 794A.5/7–2550, Formosa 1950–1954, reel 4;
CKSD, diary entries for July 7, 8, 9, 10, and 13, 1950, Box 48.
95. Strong to State Department, August 5, 1950, no. 794A.00(W)/8–550, Formosa 1950–1954, reel
2; CKSD, diary entries for July 9 and 13, 1950, Box 48.
96. General R. L. Peterson to Cooke, memorandum, October 10, 1950, Charles M. Cooke Papers,
Box 26; Captain A. B. Ewing to Cooke, memorandum, October 18, 1950, Charles M. Cooke Papers,
Box 26; Ewing to General Sun Liren, memorandum, November 17, 1950, Charles M. Cooke Papers,
Box 26.
97. Cooke to Chiang Kai-shek, “Organization of the Chinese Army,” memorandum, November 4,
1950, Charles M. Cooke Papers, Box 27; Cooke to Chiang, “Comments on Organization of the Chinese
Army,” memorandum, December 4, 1950, TD / DMW, vol. 9, no. 58893.
98. Cooke to Gui Yongqing, “Chinese Naval Establishment,” memorandum, August 31, 1950, Charles
M. Cooke Papers, Box 6; Walter Ansel to Admiral Ma Jizhuang, memorandum, September 19, 1950,
Charles M. Cooke Papers, Box 27.
99. See Cooke to Captain John Holbrook (U.S. Navy, Treasure Island, CA), July 5, 1950, Charles M.
Cooke Papers, Box 26; W. B. Davidson (U.S. Navy commanding officer, Subic Bay) to H. L.
Grosskopf, August 4, 1950, Charles M. Cooke Papers, Box 26; Cooke to Rear Admiral Bertram
Rodgers (commandant, 12th Naval District, San Francisco), March 7, 1951, Charles M. Cooke Papers,
Box 26; Cooke to Captain W. R. Cooke (U.S. Naval Receiving Station, New York), April 19, 1951,
Charles M. Cooke Papers, Box 26.
100. Cooke to James Gray, memorandum, September 14, 1950, Charles M. Cooke Papers, Box 26.
101. Cooke to General Zhou Zhirou, July 6, 1950, Charles M. Cooke Papers, Box 27.
102. Robert Stairs (radar field engineer of CIC) to General Zhou Zhirou, August 1, 1950, Charles M.
Cooke Papers, Box 27.
103. S. G. Fassoulis to James Gray, October 22, 1950, Charles M. Cooke Papers, Box 26; Koo, Gu
Weijun Huiyilu, 8:436–439.
104. State Department, “Radar and P-51’s for Formosa,” memorandum, November 17, 1950, no.
794A.561/11–1750, Formosa 1950–1954, reel 4.
105. Fassoulis to Gray, November 28, 1950, Charles M. Cooke Papers, Box 26.
106. Fassoulis to Gray, January 23 and 26, 1951, Charles M. Cooke Papers, Box 26; Cooke,
memorandum, 1951 (n.d.), Charles M. Cooke Papers, Box 26.
107. C. W. Jack (former chief accountant of CIC) to F. T. Murphy (Division of Economic Property
Policy, State Department), February 15, 1951, no. 794A.561/2–1551, Formosa 1950–1954, reel 4;
Fassoulis to Gray, January 23, 1951, Charles M. Cooke Papers, Box 26.
108. Cooke to Chiang Kai-shek, memorandum, January 23, 1951, Charles M. Cooke Papers, Box 26;
Koo, Gu Weijun Huiyilu, 8:443–448.
109. Judd to Chiang Kai-shek, March 20, 1951, Walter Judd H. Papers, Box 83; CKSD, diary entries
for March 9, 10 and 11, 1951, Box 48.
110. See, for example, Time Magazine, editorial, September 3, 1951, 11–12.
111. Rear Admiral B. B. Biggs to Major General James H. Burns, Office of the Secretary of
Defense, memorandum, June 19, 1951, NARA, RG 330, Records of the Office of the Assistant
Secretary of Defense (330.6), Box 50; “Announcement by Chinese Embassy,” 1951 (n.d.), Charles M.
Cooke Papers, Box 26.
 112. Cooke to Chiang Kai-shek, memorandum, June 8, 1951, Charles M. Cooke Papers, Box 26;
Gray to Yin Zhongrong, September 1, 1951, Charles M. Cooke Papers, Box 26; Cooke to Chiang,
September 30, 1951, Charles M. Cooke Papers, Box 27.
 CHAPTER 8 ▪ The Island Redoubt Reinvigorated
1. Richard C. Thornton, Odd Man Out: Truman, Stalin, Mao, and the Origins of Korean War
(Dulles, VA: Brassey’s, 2000), 9–23. For more about Dean Acheson’s decision to forgo relations with
the PRC, see Thomas J. Christenson, Useful Adversaries: Grand Strategy, Domestic Mobilization,
and Sino-American Conflict, 1947–1958 (Princeton, NJ: Princeton University Press, 1996), 77–138.
2. Acheson, Present at the Creation, 373–376; John Lewis Gaddis, We Now Know: Rethinking
Cold War History (Oxford: Oxford University Press, 1997), 75–77.
3. Nicholas Thompson, The Hawk and the Dove: Paul Nitze, George Kennan, and the History of
the Cold War (New York: Henry Holt, 2009), 112–114.
4. Chen Jian, Mao’s China and the Cold War (Chapel Hill: The University of North Carolina Press,
2001), 50–53.
5. Garver, The Sino-American Alliance, 23–25.
6. See, for example, “Reminiscences of Admiral Sidney Souers” (former CIA director), dated
December 15, 1954, in Documentary History of the Truman Presidency, vol. 23: The Central
Intelligence Agency: Its Founding and the Dispute over its Mission, 1945–1954, ed. Dennis
Merrill (Frederick, MD: University Publications of America, 1998), 406–408.
7. See Thornton, Odd Man Out, 119–145, for a detailed discussion on Truman and the problem of
Taiwan in the early months of 1950.
8. President’s statement, June 27, 1950, FRUS, 1950, vol. 7, Korea, 202–203.
9. Acheson to MacArthur, top secret, July 24, 1950, no. 794A.5/7–2450, Formosa 1950–1954, reel
4.
10. CKSD, diary entry for June 28, 1950, Box 48.
11. CKSD, diary entry for September 12, 1950, Box 48.
12. See Shao Yulin to Chiang Kai-shek, top secret memorandum on the U.S.-Soviet-Korea situation
and the Nationalist government strategy, March 7, 1950, TD / DHW, vol. 68, no. 54973; Shao to Chiang,
March 17, 1950, TD / DHW, vol. 68, no. 54976.
13. See, for example, Ministry of Foreign Affairs and Ministry of National Defense to Chiang Kai-
shek, joint report, February 15, 1950, TD / ZQJ, vol. 2, no. 54298; Nationalist Military Strategic Advisory
Council, proposal, May 26, 1950, TD / ZJBJ, vol. 49, no. 56808.
14. See Charles Cooke, draft of letter from Chiang Kai-shek to General MacArthur, November 13,
1950, Charles M. Cooke Papers, Box 29; Cooke to Chiang, memorandum, February 17, 1953, Charles
M. Cooke Papers, Box 2.
15. See George M. Elsey (assistant to President Truman), memorandum, June 30, 1950, in
Documentary History of the Truman Presidency, vol. 18, The Korean War: The United States’
Response to North Korea’s Invasion of South Korea, June 25, 1950-November 1950, ed. Dennis
Merrill (Frederick, MD: University Publications of America, 1997), p. 139; Department of the Army to
SCAP, Tokyo, top secret, June 30, 1950, in Documentary History of the Truman Presidency, ed.
Merrill, 18: 169. See also Acheson, Present at the Creation, 412–413.
16. Accinelli, Crisis and Commitment, 39.
17. Strong to State Department, July 21, 1950, no. 794A.00/7–2150, Formosa 1950–1954, reel 1. A
careful and excellent analysis of MacArthur and Chiang Kai-shek’s intelligence partnership during this
period can be found in Cheng David Chang, “To Return Home or ‘Return to Taiwan’: Conflicts and
Survival in the ‘Voluntary Repatriation’ of Chinese POWs in the Korean War,” (PhD dissertation,
University of California at San Diego, 2011), 30–184.
 18. Manchester, American Caesar, 563–567; Lowe, The Origins of the Korean War, 206–207.
19. Acheson, Present at Creation, 422.
20. Fox Report: Survey of Military Assistance Required by the Chinese Nationalist Forces, top
secret, September 11, 1950, NARA, RG 218, Geographical File 1948–50, Entry: UD 7, 190: 1/27/01.
21. Francis Heller, ed., The Korean War: A 25-Year Perspective (Lawrence, KS: Regents, 1977),
25.
22. Harry S. Truman, Memoirs (New York: Doubleday, 1955–56), 2:355, 430–431; Donovan,
Tumultuous Years, 262–264.
23. See State Department, “General MacArthur’s Visit to Formosa,” memorandum, August 2, 1950,
no. 794A.5/8–250, Formosa 1950–1954, reel 4; “Review of the international situation in Asia in the
light of the Korean conflict,” memorandum, August 30, 1950, CAB 129/41, CP(50) 200.
24. E. T. Biggs (British consul in Tamsui), “Summary of events in Formosa during the month of
October 1950,”November 4, 1950, in Taiwan Political and Economic Reports 1861–1960, ed.
Jarman, 9:168–175. For more about the Chinese representation issue at the United Nations, see
Rosemary Foot, The Practice of Power: US Relations with China since 1949 (Oxford: Oxford
University Press, 1995), 22–51.
25. CKSD, diary entries for September 30 and October 1 and 14, 1950, Box 48.
26. Accinelli, Crisis and Commitment, 52; Kaufman, Confronting Communism, 40–41.
27. Joint Strategic Plans Committee to the JCS, report on possible U.S. action in the event of open
hostilities between the United States and China, December 27, 1950, NARA, RG 218, Geographical File
1948–50, Entry: UD 7, 190:1/27/01; CIA National Intelligence Estimate, “Consequences of the Early
Employment of Chinese Nationalist Forces in Korea,” NIE-12, December 27, 1950, in CIA Research
Reports: China, 1946–1976, reel 1. See Chapter 9 for further discussion.
28. CKSD, diary entries for November 21 and 29, 1950, Box 48.
29. Roger Buckley, The United States in the Asia-Pacific since 1945 (Cambridge: Cambridge
University Press, 2002), 70–74.
30. For a fine analysis of the American role in the writing of the peace treaty between Taipei and
Tokyo, see Su-ya Chang, “The United States and the Long-term Disposition of Taiwan in the Making of
Peace with Japan, 1950–1952,” Asian Profile 16, no. 5 (1988): 459–470.
31. Schonberger, Aftermath of War, 269–270; Michael M. Yoshitsu, Japan and the San Francisco
Peace Settlement, Studies of the East Asian Institute (New York: Columbia University Press, 1982),
67–83.
32. Townsend Hoopes, The Devil and John Foster Dulles (Boston: Little, Brown, 1973), 106–107;
Richard H. Immerman, John Foster Dulles: Piety, Pragmatism, and Power in U.S. Foreign Policy
(Wilmington, DE: SR Books, 1998), 30–37.
33. George Yeh and Karl Rankin, minutes of conversation, June 7, 1951, 012/6–029; Wellington Koo
and Dulles, minutes of conversation, June 19, 1951, AMFA-2, 012/16.
34. CKSD, diary entry for September 9, 1951, Box 49.
35. E. H. Jacobs-Larkcom (British consul in Tamsui) to Foreign Office, February 27, 1952, FO
371/99259 FC1019/19; Qin, ed., Zhonghua Minguo Zhongyao Shiliao Chubian, 7 (4), 861–870.
36. Ibid., 1056–1060; Rankin, China Assignment, 115–117.
37. Jacobs-Larkcom to Foreign Office, May 14, 1952, FO 371/99259 FC1019/42.
38. See, for example, Wang, The Dust That Never Settles, 143–144.
39. Richard C. Bush, At Cross Purposes: U.S.-Taiwan Relations since 1942 (New York: M.E.
Sharpe, 2004), 93–94.
 40. For a detailed analysis of the 1952 Sino-Japanese peace treaty and the creation of the Republic
of China on Taiwan, see, for example, Man-houng Lin, Liewu, Jiaohun yu Rentong Weiji—Taiwan
Dingwei Xinlun [A new historical perspective of Taiwan’s legal status] (Taipei, Taiwan: Liming
Wenhua, 2008), 49–62; Tzu-chin Huang, “Zhanhou Taiwan Zhuquan Zhengyi yu ‘Zhong Ri Heping
Tiaoyue’ ” [Disputes over Taiwan’s sovereignty and the Sino-Japanese Peace Treaty since World War
II], Zhongyang Yanjiuyuan Jindaishi Yanjiusuo Jikan [Bulletin of the Institute of Modern History,
Academia Sinica] (Taipei) no. 54 (December 2006): 59–104.
41. Chu Songqiu (Chiang Kai-shek’s secretary, 1954–1958), interview with author, August 8, 2007.
42. Strong to State Department, July 8, 1950, no. 794A.00(W)/7–850, Formosa 1950–1954, reel 2;
Strong to State Department, July 29, 1950, no. 794A.00(W)/7–2950, Formosa 1950–1954, reel 2.
43. Steve Tsang, “Chiang Kai-shek and the Kuomintang’s Policy to Reconquer the Chinese
Mainland, 1949–1958,” in In the Shadow of China: Political Development in Taiwan since 1949,
ed. Steve Tsang (Honolulu: University of Hawaii Press, 1993), 69–71.
44. According to Chu Songqiu, Chiang Kai-shek’s secretary in the 1950s, Chiang was convinced that
Zhang’s scholarly background would help build up a new KMT leadership image, attract more
intellectuals to join the party, and stabilize the morale of the Taiwanese people. Chu Songqiu, interview
with author, August 8, 2007.
45. Bruce J. Dickson, “The Lessons of Defeat: The Reorganization of the Kuomintang on Taiwan,
1950–52,” China Quarterly, no. 133 (1993), 56–84; Li Yunhan, Zhongguo Guomindang Shishu,
4:74–80.
46. Central Reform Committee, annual report, August 1952, CRCA, 6.4–2, reel 5.
47. Minutes of the 30th CRC meeting, September 29, 1950, CRCA, 6.4–2, reel 1; Minutes of the
143rd CRC meeting, May 30, 1951, CRCA, 6.4–2, reel 4.
48. Roy, Taiwan: A Political History, 84–85.
49. Chen Yangde, Taiwan Difang Minxuan Lingdao Renwu di Biandong [Changes in locally
elected leaders] (Taipei, Taiwan: Siji chubanshe, 1981), 120–125.
50. Dickson, “The Lessons of Defeat,” 74–75; Steven J. Hood, The Kuomintang and the
Democratization of Taiwan (Boulder, CO: Westview, 1987), 33–34.
51. Minutes of the 87th CRC meeting, February 19, 1951, CRCA, 6.4–2, reel 2.
52. State Department, “Land Reform on Formosa,” confidential security information, August 26,
1952, no. 794A.00/8–2652, Formosa 1950–1954, reel 2.
53. Rankin to State Department, report on mutual security program in Formosa, January 9, 1953, no.
794A.5-MSP/1–953, Formosa 1950–1954, reel 4. See also F. A. Lumley, The Republic of China
under Chiang Kai-shek: Taiwan Today (London: Barrie & Jenkins, 1976), 69; Chen Cheng, Land
Reform in Taiwan (Taipei, Taiwan: China Publishing, 1961), 47–48.
54. Chi-kwan Mark’s study, based on British archival materials, indicates that, by 1953, the number
of Third Force Chinese in Hong Kong was estimated at around 5,000, with approximately 15,000
followers of varying degrees of conviction. See Mark, Hong Kong and the Cold War: Anglo-
American Relations, 1949–1957 (Oxford: Oxford University Press, 2004), 188.
55. Livingston Merchant (deputy assistant secretary of state for Far Eastern affairs), memorandum,
February 9, 1951, FRUS, 1951, vol. 7: Korea and China, Part 2, 1574–1578.
56. Zhang, Jiang Jieshi yu Wo, 484–487; Yang Tianshi, “The Third Force in Hong Kong and North
America during the 1950s,” Roads Not Taken: The Struggle of Opposition Parties in Twentieth-
Century China, ed. Roger B. Jeans (Boulder, CO: Westview, 1992), 270–271.
 57. See Thomas Tse-yu Yang, chapters 17–20, Thomas Tse-yu Yang Papers, Folder 1; Mark, Hong
Kong and the Cold War, 191–192; Zhang, Jiang Jieshi yu Wo, 495–505.
58. Xiao Jishan to Chiang Kai-shek, observation report, February 8, 1951, TD/YZ/1951, vol. 1, no.
38969; Central Reform Committee to Chiang, report on the Third Force Chinese, June 19, 1951,
TD/YZ/1951, vol. 3, no. 39073.
59. Strong to State Department, July 8, 1950, no. 794A.00(W)/7–850, Formosa 1950–1954, reel 4.
See also Xue Huayuan, Lin Guoxian, and Yang Xiujing, eds., Zhanhou Taiwan Renquan Nianbiao,
1945–1960 [Chronological table of Taiwan’s postwar human rights, 1945–1960] (Taipei, Taiwan:
Academia Historica, 2008).
60. Strong to State Department, August 19, 1950, no. 794A.00(W)/8–1950, Formosa 1950–1954,
reel 4.
61. Charles N. Spinks (first secretary of U.S. mission in Japan) to State Department, May 7, 1951,
no. 794A.00/5–751; Niles W. Bond (acting counselor of U.S. mission in Japan) to State Department,
June 22, 1951, no. 794A.00/6–2251, Formosa 1950–1954, reel 2.
62. Rankin to State Department, August 22, 1951, no. 794A.00/8–2251, Formosa 1950–1954, reel
2.
63. Chen Jiahong, Taiwan Duli Yundong Shi [History of the Taiwan independence movement]
(Taipei, Taiwan: Yushanshe, 2006), 171–177.
64. See, for example, CKSD, diary entries for June 26 and 30, July 7 and 28, and August 18, 1950,
Box 48.
65. Shen, Sun Liren Zhuan, 2:701–702. Already suspicious of Sun’s secret dealings with the United
States, Chiang deemed the MAAG proposal to empower Sun to lead the command as a matter of
“national survival.” See CKSD, diary entry for September 30, 1951, Box 49.
66. Shortly after Sun was relieved of his post, Chiang wrote in his diary that even if there were no
evidence that Sun was involved in the Communist conspiracy, he still believed that Sun would launch a
military coup against him. Chiang was convinced that the whole investigation was thoughtfully
conducted and the removal of Sun most acceptable. See CKSD, diary entry for August 20, 1955, Box
51. For a detailed examination of the Sun affair, see Shen, Sun Liren Zhuan, 2:693–825.
67. Huang Zhuoqun, narrator, Liu Yongchang ed., Wu Guozhen Zhuan: Shang Yi Ji [Memories of
the past: Biography of K. C. Wu] (Taipei, Taiwan: The Liberty Times, 1995), 2:457–459.
68. K. C. Wu was certainly aware that he no longer enjoyed strong support from Washington.
Although State Department officials regretted that Wu’s departure would mean a loss of able
administration and probable reduction in provincial influence, they expected the new provincial governor
would be chosen with a view toward effecting a smoother working relationship between central and
provincial governments, and they welcomed such a development. See Rankin to State Department, April
10, 1953, no. 794A.00(W)/4–1053, Formosa 1950–1954, reel 4.
69. See CKSD, diary entries for February 19, and March 2, 17, and 25, 1954, Box 50; Wu’s open
letters to Chiang Kai-shek, dated March 20, 28, and April 3, 1954, in Hubert G. Schenck Papers,
Hoover Institution Archives, Stanford University, Box 24.
70. Minutes of the 185th Executive Yuan meeting, May 9, 1951, in Xingzheng Yuan Dang’an
[Archives of the Executive Yuan], Academia Historica (Taipei), 105–1/016; Minutes of the 187th
Executive Yuan meeting, May 23, 1951, ibid., 105–1/017.
71. Minutes of the 234th Executive Yuan meeting, April 9, 1952, ibid., 105–1/029; Minutes of the
240th Executive Yuan meeting, May 14, 1952, ibid.
 72. British Consulate in Tamsui to Foreign Office, “Summary of Events in Formosa during July,
1954,” August 20, 1954, in Taiwan Political and Economic Reports 1861–1960, ed. Jarman, 10:534.
73. “Report on the Mutual Security Program in Formosa, First Half of 1954,” July 21, 1954, no.
794A.5-MSP/7–2154, Formosa 1950–1954, reel 4.
74. This amount was broken down as follows: $50 million for the army, $5.2 million for the navy, and
$16 million for the air force. See State Department, “Projected Formosa MDAP Program for 1952–
1955,” top secret memorandum, February 21, 1951, no. 794A.5/2–2151, Formosa 1950–1954, reel 4.
75. State Department, memorandum, February 13, 1951, no. 794A.5-MAP/2–1351; State
Department, memorandum regarding MAAG for Formosa, March 22, 1951, no. 794A.5/3–2251;
Executive Office of the President, Bureau of the Budget, to State Department, letter, March 23, 1951,
no. 794A.5/3–2351, Formosa 1950–1954, reel 4.
76. Dean Rusk to Thomas Cabot (S/ISA), “FE Proposal for Exercising United State Control over
Chinese Military Expenditures,” memorandum, May 8, 1951, no. 794A.5-MSP/5–851; Rusk to Allen
Griffin (ECA), May 9, 1951, no. 794A.5-MSP/5–951, Formosa 1950–1954, reel 4.
77. ECA presentation to the Bureau of the Budget, “Supplementary Funds for Fiscal Year 1952 to
Support Mutual Defense Assistance Program for Formosa,” top secret, May 8, 1951, no. 794A.5-
MSP/5–851; Southeast Asia Aid Policy Committee, State Department, top secret minutes, May 25,
1951, no. 794A.5-MSP/5–2551, Formosa 1950–1954, reel 4.
78. Dean Acheson to Rankin, July 13, 1951, FRUS, 1951, vol. 7: Korea and China, Part II, 1750–
1751; State Department to Nationalist Foreign Ministry, aide-mémoire, July 20, 1951, TD / DMW, vol. 9,
no. 58937.
79. CKSD, diary entries for July 24, 25, and 26, and August 1, 1951, Box 49.
80. TD / DMW, vol. 9, no. 58944, Rankin and George Yeh, minutes of conversation, July 30, 31 and
August 1, 1951; Jacobs-Larkcom to Foreign Office, “Summary of events in Formosa during the month
of June 1951,” July 23, 1951, in Taiwan Political and Economic Reports 1861–1960, ed. Jarman,
9:475.
81. Rankin to State Department, September 14, 1951, no. 794A.5-MAP/9–1451, Formosa 1950–
1954, reel 4.
82. State Department, “Chinese Budgetary Problem and Taipei’s Suggestions,” memorandum,
September 14, 1951, no. 794A.5-MAP/9–1451, Formosa 1950–1954, reel 4.
83. Rankin to State Department, September 27, 1951, no. 794A.5-MAP/9–2751, Formosa 1950–
1954, reel 4; Chen Cheng to Chiang Kai-shek, September 17, 1951, TD / DMW, vol. 9, no. 58941.
84. Rankin to State Department, October 13, 1951, no. 794A.5-MAP/10–1351, Formosa 1950–
1954, reel 4; CKSD, diary entries for September 21 and 30, and October 11 and 20, 1951, Box 49.
85. Rankin to State Department, December 16, 1951, no. 794A.00(W)/12–1651, Formosa 1950–
1954, reel 3.
86. Acheson to Rankin, Chase, and Moyer, October 17, 1951, no. 794A.5-MAP/10–1751, Formosa
1950–1954, reel 4.
87. Rankin to Acheson, October 17, 1951, no. 794A.5-MAP/10–1751, Formosa 1950–1954, reel 4.
88. Rankin to State Department, “Appraisal of Effects of United States Aid and Technical
Assistance to Formosa,” memorandum, October 14, 1954, no. 794A.5-MAP/10–1451, Formosa 1950–
1954, reel 4.
89. General Chase to General Zhou Zhirou, June 29, 1951, TD / MXT, vol. 49, no. 59126; Zhou to
Chase, January 26, 1952 TD / MXT, vol. 49, no. 59129; Rankin to State Department, Report on Mutual
Security Program in Formosa, January 9, 1953, no. 794A.5-MAP/1–953, Formosa 1950–1954, reel
4. Chiang Kai-shek regarded the army reorganization as an important measure in getting rid of incapable
officers and soldiers. See CKSD, diary entry for October 31, 1952, Box 49.
90. Jacobs-Larkcom to Foreign Office, November 25, 1952, in Taiwan Political and Economic
Reports 1861–1960, ed. Jarman, 10:166.
91. Jacobs-Larkcom to Foreign Office, October 7, 1952, in Taiwan Political and Economic
Reports 1861–1960, ed. Jarman, 10:138–139.
92. MAAG Taiwan, Activity Report for Month of November 1953, December 24, 1953, no.
794A.5-MSP/12–2453, Formosa 1950–1954, reel 4; Activity Report for Month of December 1953,
January 26, 1954, no. 794A.5-MSP/1–2654, Formosa 1950–1954, reel 4.
93. Rankin to State Department, Report on Mutual Security Program in Formosa, January 9 1953,
no. 794A.5-MSP/1–953; March 11, 1953, no. 794A.5-MSP/3–1153; Rankin to State Department,
December 25, 1953, no. 794A.00(W)/12–2553, Formosa 1950–1954, reel 4.
94. On the system of political commissars in Taiwan’s military in the 1950s, see Monte R. Bullard,
The Soldier and the Citizen: The Role of the Military in Taiwan’s Development (New York: M.E.
Sharpe, 1997), 80–130.
95. State Department, “Commissar System in Chinese Army,” memorandum, September 28, 1951,
no. 794A.551/9–2851, Formosa 1950–1954, reel 4; Zhou Zhirou to Chiang Kai-shek, memorandum
regarding General Chase’s opinions about commissar system, November 24, 1953, TD / MXT, vol. 50,
no. 59139.
96. CKSD, diary entries for August 25, 1951 and September 17, 1952, Box 49; Report of Formosa
Mutual Security Program Evaluation Team, March 13, 1953, Norwood A. Allman Papers, Hoover
Institution Archives, Stanford University, Box 13; Report on Mutual Security Program in Formosa,
January 9, 1953, no. 794A.5-MSP/1–953, Formosa 1950–1954, reel 4.
97. Rankin to State Department, “Appraisal of Effects of United States Aid and Technical
Assistance to Formosa,” memorandum, October 14, 1954, no. 794A.5-MSP/10–1454, Formosa 1950–
1954, reel 4.
98. Division of Research for Far East, State Department, Intelligence Report IR 7052, “Prospects for
U.S. and British Bases in the Far East through 1965,” September 23, 1955, in O.S.S./State Department
Intelligence and Research Reports VIII, ed. Kesaris, reel 1.
99. William Chase to Rankin, October 5, 1953, enclosed in Rankin to State Department, October 21,
1953, no. 794A.5-MSP/10–2153, Formosa 1950–1954, reel 4; CKSD, diary entry for October 6, 1953,
Box 50.
100. Howard P. Jones (U.S. chargé d’affaires) to State Department, October 6, 1953, no. 794A.5-
MSP/10–653; Jones to State Department, “Interview with President Chiang Kai-shek on United States
Review of Chinese Military Budget,” memorandum, October 8, 1953, no. 794A.5-MSP/10–853,
Formosa 1950–1954, reel 4.
101. See General Chase to General Zhou Zhirou, November 13, 1953; Chase to Chiang Kai-shek,
November 18, 1953; Chase to U.S. Department of the Army, November 24, 1953; all enclosed in Jones
to Rankin, “Ministry of National Defense Budget Estimate, January-June 1954,” December 8, 1953, no.
794A.5-MSP/12–853, Formosa 1950–1954, reel 4.
102. ROC Ministry of National Defense, ed., Mei Junyuan Guwentuan zhu Hua Shinian Jianshi
[MAAG’s Decade in the Republic of China] (Taipei, Taiwan: Ministry of National Defense, 1961), 37–
39.
 CHAPTER 9 ▪ Between Mainland and Maritime Strategies
1. CKSD, diary entries for October 4 and 14, 1950, Box 48. Chen Jian argues reasonably that, at this
juncture, a war would serve Mao’s domestic aim to transform China’s old state and society into a new
socialist country. For an analytical study of the PRC and its decision to enter the Korean War, see Chen,
Mao’s China and the Cold War, 85–117.
2. For more about Communist China’s participation in the Korean War, see Sergei N. Goncharov,
John W. Lewis, and Xue Litai, Uncertain Partners: Stalin, Mao, and the Korean War (Stanford, CA:
Stanford University Press, 1993), 168–202.
3. CKSD, diary entries for November 7 and 9, 1950, Box 48.
4. See, for example, CIA, “Strength and Usability of Chinese Nationalist Forces,” December 17,
1950, in Documentary History of the Truman Presidency, ed. Merrill, 32:364–366; and “Situation in
Korea,” memorandum of conversation, November 21, 1950, Documentary History of the Truman
Presidency, 18:679–683.
5. CKSD, diary entry for November 7, 1950, Box 48.
6. Secretaries to the Joint Chiefs of Staff, note on the blockade of the Chinese coast by Nationalist
China, August 22, 1951, NARA, RG 218, Geographical File, Security Classified 1951–53, Entry: UD 14,
24/4/07.
7. Nationalist Chinese Navy, report on the operation and closure of territorial waters, 1950 (n.d.),
Academia Historica, Xingzheng Yuan ji Suoshu Dang’an [Archives of the Executive Yuan and its
subordinate agencies], 5–2–2.1; Jacobs-Larkcom to Foreign Office, “Summary of events in Formosa
during the month of May 1951,” June 22, 1951, in Taiwan Political and Economic Reports 1861–
1960, ed. Jaman, 9:454–455.
8. CIA, “Chinese Nationalist attack on U.S. shipping,” memorandum, January 12, 1950, in CIA
Research Reports: China, 1946–1976, reel 1.
9. After war erupted in Korea, Cooke’s emphasis on the Nationalist Navy, rather than other services,
became more practical, as a strong Nationalist Navy capable of assisting the Seventh Fleet would best
serve U.S. military and strategic interests. See Cooke to General Zhou Zhirou, memorandum,
September 1950, TD / MXT, vol. 48, no. 59232; “U.S. Seventh Fleet Plan for Conducting Operations to
prevent an Invasion of Taiwan and the Pescadores,” memorandum, September 1, 1950, TD / MXT, vol.
48, no. 59233.
10. Chief of Naval Operations, “Defense of Formosa,” memorandum, July 27, 1950, NARA, RG
218, Geographical File 1948–50, Entry: UD 7, 190:1/27/01; Joint Chiefs of Staff, “Defense of Formosa,”
memorandum, August 14, 1950, NARA, RG 218, Geographical File 1948–50, Entry: UD 7, 190:1/27/01.
11. Fox Report: Survey of Military Assistance required by the Chinese Nationalist Forces, top secret,
September 11, 1950, NARA, RG 218, Geographical File 1948–50, Entry: UD 7, 190:1/27/01.
12. George Kennan to Dean Acheson, top secret memorandum, July 17, 1950, no. 794A.5/7–1750,
Formosa 1950–1954, reel 4; Kennan to Acheson, memorandum, July 24, 1950, no. 794A.5/7–2450,
Formosa 1950–1954, reel 4.
13. National Intelligence Estimate, “Consequences of the Early Employment of Chinese Nationalist
Forces in Korea,” NIE-12, December 27, 1950, CIA Research Reports: China, 1946–1976, reel 1.
14. Joint Strategic Plans Committee to the Joint Chiefs of Staff, report by on possible U.S. action in
the event of open hostilities between the United States and China, December 27, 1950, NARA, RG 218,
Central Decimal File, Security Classified 1948–50, Entry: UD 6, 631:24/2/04.
15. Ibid.
 16. Joint Strategic Plans Committee, report by on course of action relative to Communist China and
Korea—Chinese Nationalists, January 29, 1951, NARA, RG 218, Central Decimal File, Security
Classified 1951–53, Entry: UD 11, 290:24/4/07.
17. Steve Tsang’s “Chiang Kai-shek and the Kuomintang’s Policy to Reconquer the Chinese
Mainland, 1949–1958,” 48–72, presents pioneering research into Chiang Kai-shek’s true intention in
launching a counterattack against the Chinese Communists.
18. Taylor, The Generalissimo, 469–470.
19. See Chiang’s lecture to the Central Reform Committee, January 8, 1951, in Zongtong
Jianggong Sixiang Yanlun Zongji, ed. Qin, 24:1–6.
20. State Department, “Support of China Mainland Resistance and Use of Nationalist Forces on
Formosa,” top secret memorandum, January 24, 1951, in ROCA, reel 23.
21. CKSD, diary entries for January 15, 25, and 29, 1951, Box 48.
22. Shen, Sun Liren Zhuan, 2:701–702.
23. CKSD, diary entry for January 17, 1951, Box 48.
24. Robert H. Ferrell, ed., Off the Record: The Private Papers of Harry S. Truman (Columbia:
University of Missouri Press, 1980), 204.
25. Secretaries to the Joint Chiefs of Staff, “Estimate of the Effectiveness of Anti-Communist
Guerrilla Operation in China,” February 12, 1951, NARA, RG 218, Central Decimal File, Security
Classified 1951–53, Entry: UD 11, 290:24/4/07.
26. State Department, “Mr. Rankin’s Views Regarding Military Aid to Formosa and Use of
Nationalist Troops in the Far East,” top secret memorandum, February 28, 1951, no. 794A.5/2–2851,
Formosa 1950–1954, reel 4; “Assumptions for Guidance of Preparation of Plans for an Expeditionary
Operation for the Seizure and Occupation of Hainan,” memorandum by Cooke, 1951 (n.d.), Charles M.
Cooke Papers, Box 33; CKSD, diary entry for February 18, 1951, Box 48.
27. Pearlman, Truman and MacArthur, 178–180; Manchester, American Caesar, 638.
28. Manchester, American Caesar, 639–647; Jurika ed., From Pearl Harbor to Vietnam, 252–253;
Donovan, Tumultuous Years, 355–362.
29. CKSD, diary entry for April 11, 1951, Box 48.
30. A report submitted to Chiang in early 1952 indicates that only 28.3 percent of the promised
amount of U.S. military aid and only 4.41 percent of the scheduled tonnages of war materiel for the
fiscal year 1951 had reached Taiwan. See Zhou Zhirou to Chiang, January 22, 1952, TD / ZJBJ, vol. 50,
no. 56694.
31. For related analyses and discussions, see, for example, Taylor, The Generalissimo, 454–502.
32. CKSD, diary entries for July 25 and 28, 1951, Box 49.
33. CKSD, diary entry for August 8, 1951, Box 49.
34. CKSD, diary entry for December 20, 1951, Box 49; Cooke to Chiang, memorandum, December
23, 1951, Charles M. Cooke Papers, Box 2.
35. Chief of Naval Operations to the Joint Chiefs of Staff, memorandum, February 5, 1952, NARA,
RG 218, Geographical File 1951–53, Entry: UD 13, 190:1/32/08; Secretaries to the Joint Chiefs of Staff,
note on proposed sweep along the China Coast, February 8, 1952.
36. Joint Strategic Plans Committee, Employment of Chinese Nationalist Forces outside Formosa,
April 24, 1952, NARA, RG 218, Geographical File 1951–53, Entry: UD 13, 190:1/32/08.
37. State Department, top secret memorandum, May 6, 1952, no. 794A.5/5–652, Formosa 1950–
1954, reel 4.
38. CKSD, diary entries for March 23 and 24, 1952, Box 49.
 39. Zhou Zhirou to Chiang Kai-shek, March 20, 1952, TD / ZQJ, vol. 4, no. 56896.
40. CKSD, diary entry for March 26, 1952, Box 49.
41. Jacobs-Larkcom to Foreign Office, “Summary of Events in Formosa during May, 1952,” June 17,
1952, FO 371/99217 FC1019/46.
42. Chiang Kai-shek and Admiral Arthur Radford, minutes of conversation, May 9, 1952, TD /
DMW, vol. 11, no. 58956.
43. See CKSD, diary entries for July 20 and October 16, 1952, Box 49.
44. Jacobs-Larkcom to Foreign Office, September 3, 1952, in Taiwan Political and Economic
Reports 1861–1960, ed. Jarman, 10:124–125.
45. Zheng Jiemin and Chiang Ching-kuo to Chiang Kai-shek, report, November 22, 1950, TD / XQG,
no. 59771; Zheng Jiemin and Chiang Ching-kuo to Chiang Kai-shek, November 26, 1950, TD / XQG,
no. 59772.
46. For more on the CIA’s misjudgment about Mao Zedong’s entry into the war, see CIA Research
Report, ORE 58–50, “Critical Situation in the Far East,” October 12, 1950, in CIA Research Reports:
China, 1946–1976, reel 1. See also Ranelagh, The Agency, 215; and Allan R. Millett, The War for
Korea, 1950–1951: They Came from the North (Lawrence: University Press of Kansas, 2010), 298–
303.
47. Zheng Jiemin to Chiang Kai-shek, March 17, 1951, TD / XQG, no. 59776.
48. CKSD, diary entry for July 2, 1951, Box 49. See also Frank Holober, Raiders of the China
Coast: CIA Covert Operations during the Korean War (Annapolis, MD: Naval Institute Press, 1999),
108–109; Jing Shenghong, Xibeiwang Hu Zongnan (Hu Zongnan: master of the Northwest)
(Zhengzhou, China: Henan renmin chubanshe, 1995), 441–448.
49. Joint Activities Report for Month of September 1952, commissioned by Guerrilla Committee,
October 1952, TD / XQG, no. 59782.
50. Zheng Jiemin to Chiang Kai-shek, March 15, 1952, TD / JMBZ, vol. 103, no. 58130.
51. Charles Johnston to Madame Chiang Kai-shek, March 15, 1951, TD / XQG, no. 59781; CKSD,
diary entries for April 15 and 18, 1951, Box 48. Other members of the Guerrilla Committee included
Zheng Jiemin, Mao Renfeng, Claire Chennnault, and Robert J. Delaney. See Guerrilla Committee to
Chiang Kai-shek, March 12, 1952, memorandum, TD / JMBZ, vol. 101, no. 58090.
52. During the height of WEI activities in 1952 and 1953, Chiang continued to believe that
recapturing the mainland should be a long-term goal taking even up to ten years to fulfill. To a certain
degree, his realistic attitude might have stemmed from what he had seen during these covert activities.
See, for example, CKSD, diary entries for March 14, May 3, and June 18, 1953, Box 50.
53. For a detailed narrative of these raid operations, see Holober, Raiders of the China Coast.
54. Delaney to Chiang Kai-shek, June 6, 1953, memorandum, TD / XQG, no. 59784; Delaney to
Chiang, June 10, 1953, TD / XQG, no. 59795; Guerrilla Committee, “Talushan, Hsiaolushan, and
Yanghsu—After Action Report,” top secret memorandum, June 27, 1953, TD / JMBZ, vol. 101, no.
58099; Report on the Dachen Situation, by Guerrilla Committee, July 1953, TD / JMBZ, vol. 101, no.
58094.
55. Accinelli, Crisis and Commitment, 138–139.
56. “An Outline of the Supply Plan for a Counter-Offensive on the Mainland by the National Armed
Forces,” by Nationalist Ministry of Defense, May 27, 1953, TD / DMW, vol. 11, no. 58952.
57. Nationalist Ministry of Defense recommendations concerning Nationalist forces in Vietnam,
August 1950, TD / JMBZ, vol. 104, no. 58136; Report submitted by the KMT Party to Chiang Kai-shek
regarding Nationalist secret activities in Hong Kong and Southeast Asia, March 20, 1951, TD / ZQJ,
vol. 380, no. 56896.
58. State Department, “U.S. Government Response to Oral Message from Generalissimo Chiang
Kai-shek to Mr. Lovett,” top secret memorandum, May 25, 1951, no. 794A.5/5–2551, Formosa 1950–
1954, reel 4. See also Robert J. McMahon, The Limits of Empire: The United States and Southeast
Asia since World War II (New York: Columbia University Press, 1999), 59–63.
59. Rankin to State Department, July 2, 1951, no. 794A.5-MAP/7–2551; U.S. Embassy in France to
State Department, July 5, 1951, no. 794A.5-MAP/7–5551; Donald Heath (U.S. consul general in
Saigon) to State Department, July 13, 1951, no. 794A.5-MAP/7–1351, Formosa 1950–1954, reel 4.
60. State Department, Memorandum of Conversation, Subject: Chinese Troops in Indochina, August
29, 1951, NARA, RG 59, 793.5851G/8–2951.
61. State Department to U.S. Legation in Saigon, September 24, 1951, NARA, RG 59, 793.5851G/9–
2451; Heath to State Department, December 18, 1951, NARA, RG 59, 793.5851G/12–1851. As late as
October 1952, the Joint Chiefs of Staff still considered the use of Nationalists on Indochina feasible
should the Vietminh forces be reinforced by the Chinese Communists. See Joint Strategic Plans
Committee memorandum, October 23, 1952, RG 218, Geographical File 1951–53, Entry: UD 10,
190:1/29/01.
62. Rankin to State Department, May 1, 1953, no. 794A.00(W)/5–153, Formosa 1950–1954, reel 3;
Rankin to State Department, May 8, 1953, no. 794A.00(W)/5–853, Formosa 1950–1954, reel 3;
Rankin to State Department, July 13, 1953, no. 794A.5-MSP/7–1353, Formosa 1950–1954, reel 4;
CKSD, diary entries for May 3, 9, and 19, 1953, Box 50.
63. State Department, “Proposed Financial Aid to the Government of China to Support Repatriation
of Chinese Internees from Indochina,” memorandum, May 18, 1953, in ROCA, reel 32.
64. William M. Leary, Perilous Missions: Civil Air Transport and CIA Covert Operations in Asia
(Tuscaloosa: University of Alabama Press, 1984), 128–131; Alfred W. McCoy, The Politics of Heroin:
CIA Complicity in the Global Drug Trade (Chicago: Lawrence Hill Books, 1991), 163–168.
65. Chinese Embassy Thailand to Chiang Kai-shek, top secret, February 8, 1951, TD / JMBZ, vol.
104, no. 58150. See also Victor S. Kaufman, “Trouble in the Golden Triangle: The United States, Taiwan
and the 93rd Nationalist Division,” China Quarterly, no. 166 (2001): 441–442.
66. Robert H. Taylor, Foreign and Domestic Consequences of the KMT Intervention in Burma
(Ithaca, NY: Department of Asian Studies, Cornell University, 1973), 32–33; McCoy, The Politics of
Heroin, 169–179; Kaufman, “Trouble in the Golden Triangle,” 442.
67. Ranking to State Department, April 1, 1952, no. 794A.521/4–152, Formosa 1950–1954, reel 4.
See also Lifayuan Gongbao [Gazette of the Legislative Yuan], 11 no. 6 (June 1953): 24–26.
68. Topping, On the Front Lines of the Cold War, 148–150; Alexander Cockburn and Jeffrey St.
Clair, Whiteout: The CIA, Drugs and the Press (London: Verso, 1998), 215–234.
69. Office of Intelligence Research, Department of State, IR no. 5480.1, “Chinese Communist
influence in Burma,” April 15, 1952, O.S.S./State Department Intelligence and Research Reports
VIII, reel 1; Division of Research for Far East, Department of State, IR no. 7350, “Disputed Frontiers:
The Shan and Kachin States of Burma,” November 29, 1956, O.S.S./State Department Intelligence
and Research Reports VIII, reel 1.
70. CKSD, diary entry for March 21, 1952, Box 49.
71. Shelby Tucker, Burma: The Curse of Independence (London: Pluto, 2001), 165–168; Matthew
Foley, The Cold War and National Assertion in Southeast Asia: Britain, the United States and
Burma, 1948–1962 (London: Routledge, 2010), 97–117.
 72. Li Mi to Chiang Kai-shek, report, February 26, 1953, TD / JMBZ, vol. 104, no. 58153; CKSD,
diary entry for March 26, 1953, Box 50.
73. CKSD, diary entries on February 21 and 25, and March 2, 18, and 26, 1953, Box 50; Rankin to
Walter P. McConaughy, May 4, 1953, NARA, RG 59, 794A.11/5–453.
74. Rankin to State Department, May 8, 1953, no. 794A.00(W)/5–853, Formosa 1950–1954, reel 3;
Rankin to State Department, February 19, 1954, no. 794A.00(W)/2–1954, Formosa 1950–1954, reel 3;
Li Mi to Chiang Kai-shek, top secret, July 1, 1953, TD / JMBZ, vol. 104, no. 58162; Zhou Zhirou to
Chiang, November 28, 1953, TD / JMBZ, vol. 104, no. 58157.
 CHAPTER 10 ▪ The Making of an Island State
1. Burton I. Kaufman, The Korean Conflict (Westport, CT: Greenwood, 1999), 59–69; Peter Lowe,
The Korean War (New York: St. Martin’s, 2000), 90–100.
2. Howard Jones to State Department, April 23, 1953, no. 794A.5/4–2353, Formosa 1950–1954,
reel 4; Rankin to State Department, September 4, 1953, no. 794A.00/9–453, Formosa 1950–1954, reel
2; CKSD, diary entries for April 15 and June 7 and 23, 1953, Box 50.
3. CKSD, diary entry for June 7, 1953, Box 50.
4. Zhou Zhirou to Chiang Kai-shek, January 12, 1953, TD / ZQJ, vol. 4, no. 56893; CKSD, diary
entry for January 9, 1953, Box 50.
5. See Minutes of the 42nd CRC meeting, October 28, 1950, CRCA, 6.4–2, reel 2; Minutes of the
136th CRC meeting, May 21, 1951, ibid; Zhou Zhirou to Chiang, January 24, 1953, TD / ZQJ, vol. 4, no.
56892.
6. Jacob-Larkcom to Foreign Office, “Summary of Events in Formosa during February, 1953,”
March 24, 1953, in Taiwan Political and Economic Reports 1861–1960, ed. Jarman, 10:315–316.
7. Outlines of military operations in Dongshan, top secret, Nationalist Ministry of National Defense,
1953 (n.d.), TD / ZJS, vol. 8, no. 56952.
8. Jacobs-Larkcom to Foreign Office, July 23, 1953, FO 371/105180 FC10111/50; Admiral Gui
Yongqing (personal chief of staff to Chiang Kai-shek) to Charles Cooke, August 14, 1953, Charles M.
Cooke Papers, Box 6; Holober, Raiders of the China Coast, 195–222.
9. CKSD, diary entries for July 18, 21, 24, and 31, 1953, Box 50.
10. Holober, Raiders of the China Coast, 221–222.
11. Rankin to State Department, top secret, July 17, 1953, no. 794A.5/7–1753, Formosa 1950–
1954, reel 4; State Department, memorandum, August 3, 1953, no. 794A.5/8–353, Formosa 1950–
1954, reel 4; Rankin to State Department, top secret, September 4, 1953, no. 794A.5-MSP/9–453,
Formosa 1950–1954, reel 4.
12. Tang Enbo to Chiang Kai-shek, September 23, 1949, TD / ZJJR, vol. 444, no. 54221; Tang to
Chiang, September 1949, TD / ZJJR, vol. 444, no. 54222; “The proposed budget for the establishment of
the New Army,” prepared by Tang Enbo, 1949 (n.d.), TD / ZJJR, vol. 444, no. 54223.
13. Outlines of “Anti-Communist New Force,” prepared by Tang Enbo, 1949 (n.d.), TD / ZJJR, vol.
444, no. 54225; Opinions regarding financing and subsidizing the New Army, 1949 (n.d.), vol. 445, no.
54226.
14. See Society of the Baituan Records Preservation, ed., “Haitan Monogatari” [The story of
Baituan], Part 4, Kaisha [Journal of the Military Club] 1 (Tokyo, 1993): 26–27.
15. Strong to State Department, May 19, 1950, no. 794A.00(W)/5–1950; Strong to State Department,
July 1, 1950, no. 794A.00(W)/7–150, Formosa 1950–1954, reel 2.
16. General Chase first broached the issue of Baituan and his opposition to its existence in a meeting
with Chiang Kai-shek on June 27, 1951. Chiang was surprised and annoyed, and decided to ignore the
issue. See CKSD, diary entry for June 27, 1951, Box 49.
17. Rankin to State Department, August 28, 1951, no. 794A.553/8–2851, Formosa 1950–1954, reel
4.
18. Rankin to State Department, July 2, 1951, no. 794A.553/7–251, Formosa 1950–1954, reel 4.
19. CKSD, diary entries for July 5, 7, 16, August 8, and November 24, 1952, Box 49; Society of the
Baituan Records Preservation, ed., “Haitan Monogatari,” Part 7, Kaisha 4 (1993): 23–35.
 20. Ibid., Part 15, Kaisha 12 (1993): 20–26. See also Lin Zhaozhen, Fumian Budui [The masked
troops] (Taipei, Taiwan: Shibao chubanshe, 1996).
21. General Peng Mengqi to Chiang Kai-shek, “Guang” Plan, May 23, 1953, TD / SX, vol. 2, no.
58958; Peng to Chiang, addendum to “Guang” Plan, May 1953, TD / SX, vol. 2, no. 58559; Peng to
Chiang, “The first-stage operation plan of the Guang Plan,” May 1953, TD / SX, vol. 2, no. 58560.
22. CKSD, diary entry for June 11, 1953, Box 50.
23. CKSD, diary entries for November 12, 13, 17, and 29, 1952, Box 49; Chiang Kai-shek, copy of
handwritten instructions, 1952 (n.d.), TD / GSJ, vol. 4, no. 56925.
24. MAAG Taipei to State Department, CINCPAC (Pearl Harbor), and CINCFE (Tokyo),
December 8, 1952, ROCA, reel 27.
25. CKSD, diary entries for December 9, 10, and 11, 1952, Box 49.
26. CKSD, diary entries for June 2 and 4, 1953, Box 50.
27. CKSD, diary entry for July 20, 1953, Box 50.
28. Foreign Minister George Yeh to Admiral Radford, top secret letter, January 4, 1954, enclosed in
MAAG memorandum to General Zhou Zhirou, February 4, 1954, no. 794A.5-MSP/2–454, Formosa
1950–1954, reel 4.
29. CKSD, diary entry for December 28, 1953, Box 50.
30. MAAG Formosa to the adjunct general, Department of the Army, top secret, February 20, 1954,
no. 794A.5-MSP/2–2054, Formosa 1950–1954, reel 4.
31. Rankin to State Department, “Chinese Government Military Aid Proposal,” top secret
memorandum, March 8, 1954, no. 794A.5-MSP/3–854, Formosa 1950–1954, reel 4.
32. Walter McConaughy to Walter Robertson, top secret State Department office memorandum,
March 8, 1954, no. 794A.5-MSP/3–854, Formosa 1950–1954, reel 4.
33. Rankin to Everett Drumright (deputy assistant secretary of state), March 13, 1954, no. 794A.5-
MSP/3–1354, Formosa 1950–1954, reel 4.
34. CKSD, diary entries for February 3 and March 21, 1954, Box 50.
35. Ranelagh, The Agency, 430–431.
36. A. H. B. Hermann (British consul in Tamsui) to Foreign Office, May 27, 1954, FO 371/110232
FC1019/29.
37. Chiang Kai-shek and James Van Fleet, minutes of conversation, May 13, 1954, TD / DMW, vol.
12, no. 58983; Chiang and Van Fleet, minutes of conversation, May 16, 1954, TD / DMW, vol. 12, no.
58985; CKSD, diary entries for May 13 and 16, 1954, Box 50.
38. Qiang Zhai, The Dragon, the Lion, and the Eagle: Chinese-British-American Relations,
1945–1958 (Kent, OH: The Kent State University Press, 1994), 155–156; Hoopes, The Devil and
John Foster Dulles, 263–265.
39. State Department, “Notes on General Chiang Ching-kuo’s call on Secretary of State Dulles,”
memorandum, October 1, 1953, in ROCA, reel 30.
40. Ibid., 156–157; Rankin, China Assignment, 193–196.
41. CKSD, diary entries for June 19 and 21, 1954, Box 50.
42. CKSD, diary entry for June 28, 1954, Box 50.
43. Zhai, The Dragon, the Lion, and the Eagle, 157–158; Thomas E. Stolper, China, Taiwan, and
the Offshore Islands: Together with an Implication for Outer Mongolia and Sino-Soviet Relations
(New York: M.E. Sharpe, 1985), 45–50.
44. Hermann to Foreign Office, October 6, 1954, FO 371/110239 FC1019/53.
 45. For more on the Quemoy artillery war in September 1954, see Chang, Friends and Enemies,
116–120; Michael Szonyi, Cold War Island: Quemoy on the Front Line (Cambridge: Cambridge
University Press, 2008), 42–49.
46. CKSD, diary entries for September 8 and 9, 1954, Box 51; The ambassador in the Republic of
China (Rankin) to the Department of State, September 9, 1954, FRUS 1952–1954, vol. 14: China and
Japan, Part 1, 581–582.
47. CKSD, diary entries for September 10, 12, and 14, 1954, Box 51.
48. Rankin to State Department, memorandum of September 21, 1954 conversation among President
Chiang, Ambassador Rankin, and General Chase, September 21, 1954, no. 794A.5-MSP/9–2154,
Formosa 1950–1954, reel 4; CKSD, diary entry for September 21, 1954, Box 51.
49. Chairman of the Joint Chiefs of Staff to the Secretary of Defense, memorandum, September 11,
1954, FRUS 1952–1954, vol. 14: China and Japan, Part 1, 558–610.
50. Acting Defense Secretary (Anderson) to President Eisenhower, September 3, 1954, FRUS
1952–1954, vol. 14: China and Japan, Part 1, 556–557.
51. Accinelli, Crisis and Commitment, 165–168; Steve Tsang, The Cold War’s Odd Couple: The
Unintended Partnership between the Republic of China and the UK, 1950–1958 (London: I.B.
Tauris, 2006), 121–138.
52. British consul in Tamsui to Foreign Office, October 22, 1954, in Taiwan Political and Economic
Reports 1861–1960, ed. Jarman, 10:544.
53. Rosemary Foot, “The Search for a Modus Vivendi: Anglo-American Relations and China Policy
in the Eisenhower Era,” in The Great Powers in East Asia, 1953–1960, eds. Warren I. Cohen and
Akira Iriye (New York: Columbia University Press, 1990), 152–153.
54. Rankin to State Department, October 5, 1954, no. 794A.5-MSP/10–554; Robertson to Dulles, top
secret memorandum, October 7, 1954, no. 793.5/10–754, Formosa 1950–1954, reel 4.
55. Dulles to Robertson, memorandum, October 8, 1954, FRUS 1952–1954, vol. 14: China and
Japan, Part 1, 709.
56. Division of Research for Far East, State Department, Intelligence Report IR 7052, “Prospects for
U.S. and British Bases in the Far East through 1965,” September 23, 1955, in O.S.S./State Department
Intelligence and Research Reports VIII, reel 1. See also Ralph N. Clough, Island China (Cambridge,
MA: Harvard University Press, 1978), 10–14.
57. CKSD, diary entries for October 12 and 13, 1954, Box 51.
58. For the details of the meetings between Robertson and Chiang in Taipei, see memorandum of
conversation, October 13, 1954, FRUS 1952–1954, vol. 14: China and Japan, Part 1, 728–753.
59. Rankin to State Department, November 6, 1954, no. 794A.00(W)/11–654, Formosa 1950–1954,
reel 4. For a careful analysis of John Foster Dulles’s management of the 1954 Taiwan Strait crisis, see
also Appu K. Soman, Double-Edged Sword: Nuclear Diplomacy in Unequal Conflicts: The United
States and China, 1950–1958 (Westport, CT: Praeger, 2000), 122–153.
60. Memorandum of conversation, top secret, November 4, 1954, FRUS 1952–1954, vol. 14: China
and Japan, Part 1, 860–861; George Yeh and Robertson, minutes of meeting, November 4, 1954, TD /
DMW, vol. 12, no. 58982.
61. CKSD, diary entry for November 7, 1954, Box 51; Soman, Double-Edged Sword, 146–148.
62. Memorandum of conversation, top secret, November 6, 1954, FRUS 1952–1954, vol. 14: China
and Japan, Part 1, 870–871; George Yeh and Robertson, minutes of meeting, November 6, 1954, TD /
DMW, vol. 12, no. 58982.
 63. Memorandum of conversation, top secret, November 16, 1954, FRUS 1952–1954, vol. 14:
China and Japan, Part 1, 896–898; George Yeh and Robertson, minutes of meeting, November 16,
1954, TD / DMW, vol. 12, no. 58982.
64. CKSD, diary entry for November 11, 1954, Box 51.
65. Memorandum of conversation, top secret, November 19, 1954, FRUS 1952–1954, vol. 14:
China and Japan, Part 1, 904–908; George Yeh and Robertson, minutes of meeting, November 16,
1954, TD / DMW, vol. 12, no. 58982.
66. Rankin to State Department, December 11, 1954, no. 794A.00(W)/12–1154, Formosa 1950–
1954, reel 4. A similar observation was shared by the British consular staff in Taiwan. See, for
example, “Tamsui Political Summary, November and December, 1954,” in Taiwan Political and
Economic Reports 1861–1960, ed. Jarman, 10:556–558.
67. CKSD, diary entry for December 3, 1954, Box 51.
 Conclusion
1. Qin, ed., Zongtong Jianggong Sixiang Yanlun Zongji, 26:183–184.
2. Ibid., 184.
3. MAAG Taipei to CINCPAC and the State Department, November 10, 1954; CINCPAC to
MAAG Taipei and the State Department, November 16, 1954; State Department, “Reported Chinese
Communist Assault on Wu-Ch’iu,” memorandum, November 26, 1954, ROCA, reel 37.
4. CINCPAC to MAAG Taipei and the State Department, December 7, 1954, ROCA, reel 37.
5. Accinelli, Crisis and Commitment, 185–189; Soman, Double-Edged Sword, 130–131.
6. CKSD, diary entries for January 20, 21, and 22, 1955, Box 51.
7. Accinelli, Crisis and Commitment, 190–194. The withdrawal was completed by February 11,
1955, and soon thereafter the PLA peacefully occupied the Dachens.
8. CKSD, diary entries for January 29, 30, and 31, 1955, Box 51.
9. Dulles to the State Department, March 4, 1955, FRUS 1955–1957: China, 323–324; CKSD,
diary entries for March 2 and 3, 1955, Box 51.
10. Hsu Po-lin, interview with author, May 25, 2007. See also Office of the Compilation of Military
History, National Defense Ministry ed., Chenfeng di Zuozhan Jihua [Guoguang war plan: an oral
history collection] (Taipei, Taiwan: Office of the Compilation of Military History, National Defense
Ministry, 2005).
11. Kenneth W. Condit, The Joint Chiefs of Staff and National Policy, 1955–1956, vol. 6:
History of the Joint Chiefs of Staff (Washington, DC: Historical Office, Joint Chiefs of Staff, 1992),
208–209.
12. Dwight D. Eisenhower, The White House Years: Waging Peace, 1956–1961 (Garden City,
NY: Doubleday, 2000), 298–300.
13. Memorandum of conversation, October 23, 1958, FRUS 1958–1960: vol. 19, China, 438–440;
Dulles to the State Department, October 23, 1958, ibid., 444. For more about Dulles’s handling of the
1958 offshore island crisis, see Soman, Double-Edged Sword, 173–200.
14. Chang, Friends and Enemies, 198.
15. CKSD, diary entries for October 23, 24, 25, and 26, 1958, Box 67.
16. See, for example, Wang Shichun, Piaoyi Suiyue: Jiangjun Dashi Hu Xin de Zhanzheng Jishi
[A memoir of General Hu Xin] (Taipei, Taiwan, Lianhe Wenxue, 2006), 153–155, 168–212; Institute of
Modern History, Academia Sinica, ed., Jiang Zhongzheng Zongtong Shicong Renyuan Fangwen
Jilu [The reminiscences of President Chiang Kai-shek by his followers] (Taipei, Taiwan: Institute of
Modern History, Academia Sinica, 2012), volume 1, 28–29.
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ORAL INTERVIEWS WITH AUTHOR

Chen, Li’an, Chen Cheng’ son; Sierra Madre, California, August 2, 2010.
Chu, Songqiu, Chiang Kai-shek’s secretary, 1954–1958; San Jose, California, August 8, 2007.
Colonel (retired) Hsu Po-lin, Battalion Commander, The 1st Independent Armored Brigade of the ROC
Army, 1969–1973; Hukou, Taiwan, May 25, 2007.
Shen, Keqin, General Sun Liren’s aide-de-camp, 1949–1950; Milpitas, California, December 6, 2007.

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in 1949]. In Yi-jiu-si-jiu nian: Zhongguo de Guanjian Niandai Xueshu Taolunhui Lunwenji
[Symposium on 1949, China’s crucial year]. Edited by the Academia Historica. Taipei, Taiwan:
Academia Historica, 2000, 285–328.
 Acknowledgments

MANY BRILLIANT AND generous people helped with this book. I want first to
thank Thomas W. Gilligan, the Tad Taube Director of the Hoover Institution,
Stanford University, for his leadership and commitment to making Hoover a
stimulating place for academic excellence, and Eric Wakin, the Robert H.
Malott Director of Library and Archives at the Hoover Institution, for his
unfailing support and encouragement of both my research and my curatorial
work. My appreciation also goes to my other colleagues at Hoover who have
and continue to go out of their way to make this place a great place for
academic pursuits: David Brady, Lanhee Chen, Chris Dauer, Larry Diamond,
Paul Gregory, Thomas H. Henriksen, Herb Klein, Tai-chun Kuo, Stephen
Langlois, Alice L. Miller, Ramon H. Myers, Lisa Nguyen, Alvin Rabushka,
John Raisian, Henry S. Rowen, Anatol Shmelev, Maciej Siekierski, Richard
Sousa, Danielle Scott Taylor, Paul Thomas, E. Ann Wood, and Amy Zegart. I
owe an enormous intellectual debt to the following scholars and friends who
read all or part of the manuscript and provided critical and invaluable
comments, suggestions, and criticism: Ming K. Chan, Cheng David Chang,
Joseph W. Esherick, John Garver, Chi-kwan Mark, Leo Soong, Paul H. Tai,
and Wen-hsin Yeh.
Parts of this text have been presented at seminars, workshops, and
conferences at St. Antony’s College at Oxford University, the Institute of
Modern History at the Chinese Academy of Social Sciences (Beijing), the
School of International Studies at Renmin University of China (Beijing), the
Department of History at Peking University (Beijing) and at Fudan University
(Shanghai), the Academia Historica (Taipei), the National Tsing Hua
University of Taiwan, the National Cheng Kung University of Taiwan, and
the National Institute for Defense Studies of the Japanese Ministry of Defense
(Tokyo). I greatly appreciate all the helpful suggestions from those attending,
especially Li Chang, Su-ya Chang, Hsiang-ke Chao, Hsin-chih Chen, Li-wen
Chen, Yung-fa Chen, Hsi-sheng Ch’i, Duan Ruicong, Tien-sze Fang, Madoka
Fukuda, Thomas Gold, Emily Hill, Max Ko-wu Huang, Nobu Iwatani, Jin
Yilin, Shin Kawashima, Xiaogang Lai, Li Chen, Tung-fa Lin, Wei-kai Liu,
Fang-shang Lu, Yasuhiro Matsuda, Luo Min, Rana Mitter, Niu Dayong, Shen
Zhihua, Junichiro Shoji, Kyoichi Tachikawa, Steve Tsang, Hans Van de Ven,
Wang Chaoguang, Wang Jianlang, Peter Chen-main Wang, Wu Jingping, Su-
feng Wu, Tatsuo Yamada, Yang Kuisong, Yang Tianshi, and Zhang Baijia.
My special thanks to the staff for their assistance in the following libraries
and archives, where I spent hours sifting through primary-source materials
and poring over reels of microfilmed and digitized documents related to my
research: U.S. National Archives and Records Administration II (Maryland),
Hoover Institution Archives and Cecil H. Green Library of Stanford
University (California), British National Archives (London), Academia
Historica (Taipei), and Archives of the Institute of Modern History,
Academia Sinica (Taipei). Outstanding graduate student assistants in the
United States and Taiwan were Hsin-min Chang, Chiao-chun Cheng, Shan-
yao Yang, Yundi You, and Zhai Xiang. I am also grateful to Wenlung Wang,
curator at the Kuomintang Party History Institute (Taipei), for permission to
reproduce some of the photographs in this book.
Kathleen McDermott, my principal editor at Harvard University Press,
was a splendid collaborator in bringing the book to life; her encouragement
and helpful advice are deeply appreciated. My special thanks also to
Stephanie Vyce, Michael Higgins, Katrina Vassallo, Anne Zarrella, Deborah
Grahame-Smith, and Carol Noble, whose enthusiasm and support for this
project never flagged. The two anonymous readers provided useful
suggestions for revisions; their input and criticism have made the book even
better. I am also grateful for the insightful comments from the Harvard
University Press Board of Syndics. Although all those individuals
contributed to this work, I am responsible for any mistakes or flaws.
Finally, my family was incredibly supportive as I wrote this book. My
parents, Wen-huei Lin and Pei-hua Kuo, have always provided constant
encouragement. My wife, Hai-lei, supplied affection, care, endurance, and
inspiration. My sons, Ian and Ethan, enrich my life and gave me the courage
to undertake this project.
 Index

Accinelli, Robert, 157, 174

Acheson, Dean, 79, 97, 159, 163, 174; on Chiang as leader of Free China, 192; on economic aid
to Taiwan, 52; and Formosa League for Re-emancipation, 132, 133; Kennan memorandum to,
199; Lapham memorandum to, 86; Li meeting with (1950), 121; and MacArthur, 172, 175; on
military aid to Nationalists, 107, 108, 128; and nonintervention policy of U.S., 170; and
privatizing U.S. policy toward Nationalist China, 141–142, 143; on Sun, 80; on uncertain status
of Taiwan, 172; and Yunnan independence movement, 117
Aid from U.S., 7; Butterworth on, 127–128; to Chiang, 113–114; in coup plans against Chiang,
160; Fox report recommendations on, 175, 189; to Hainan Island, 7, 125; Kerr
recommendations on, 52, 57; Koo request for, 107; Lapham on, 86, 101; Liao request for, 131;
Li request for, 107–108; Madame Chiang lobbying for, 74, 77; for mainland recovery plans,
209–210, 223, 224; mainland recovery strategy as requirement for, 204; military budget in,
189–194; to non-Communists, 78–79, 108–109; privatization of, 141–169; to regional leaders,
7, 71, 109, 110, 113, 116, 124; Soong requesting, 64; to Southwest China, 109, 110; and Yunnan
independence movement, 116–118
Allied powers, 249n1; in Cairo Conference, 3, 14, 19–20; in early post-colonial Taiwan, 35–36, 37,
38; MacArthur as commander of, 46; military operations against Japanese facilities in Taiwan,
25; and postwar plans for Taiwan, 23, 29; supporting lost territories of China, 20, 21, 23;
Supreme Commander for (See Supreme Commander for Allied Powers)
Americanization of Nationalist military, 194
American Liaison Group, 36–37, 38
Ammunition. See Military supplies
Amoy, 27, 219, 227

Badger, Oscar C., 107–108, 113, 114, 127

Bai Chongxi, 56, 61, 75, 83–84, 89–90; aid from U.S. to, 113; control of Central China, 83, 84,
101, 106–107, 266n7; defending Guangzhou, 115; on exiled Nationalist forces in Vietnam, 138
Baituan military training, 220–221, 299n16
Bandit suppression, 62, 63, 68, 82, 112, 116
Bank of Taiwan, 94, 191
Barr, David, 67, 86
Barrett, David, 140, 155
Big Four powers, 14, 249n1
Blake, Ralph J., 42–43, 49–52
Blockade of Chinese coast by Nationalists, 198
Brennan, James, 76–77
Britain: in Cairo Conference, 3, 14, 19–20; concerns about mainland recovery strategies, 206,
207; economic interests in Guangdong Province, 65–66; encouraging separatist movement in
 South China, 69; expectations on outcome of Chinese civil war, 68–69; and February 1947
incident, 51; military supplies from, 142; in peace negotiations, 178; and UN plan on Taiwan,
176–177
Burma, 16; Nationalist forces in, 11, 137, 138, 211–215
Butterworth, W. Walton, 127–128

Cairo Conference, 3, 14, 18, 19, 30, 239; Declaration from, 19, 23, 30, 132
Causeway Operation, 26
Central China, Bai Chongxi in control of, 83, 84, 101, 106–107, 266n7
Central Club Clique (CC Clique), 32, 75
Central Reform Committee (CRC), 93f, 180–183, 181f, 201
Chase, William: advisory and training activities of MAAG under, 169, 193, 218; appointed as chief
of MAAG, 168; and Baituan military training program, 222; Chiang meeting with, 190f, 228;
and Japanese military advisors, 220, 299n16; on Kai plan, 224; and military budget of
Nationalists, 189, 190–191, 195; proposed trip to Vietnam, 210; and Sun, 186
Chen Cheng, 6, 8, 90–97, 93f, 180, 235, 265n99; appointment as premier, 121–122, 123; and
Chiang, 6, 79, 81, 82, 90–97, 104–105, 106, 265n99; economic measures of, 93–94; as
governor of Taiwan, 77, 82, 90–97; land reform program of, 95, 183; and Li, 6, 91–93, 100,
105; martial law declared by, 95; and Merchant, 79; political prisoners taken by, 185;
resignation of, 120; and Sun, 79–81, 88, 105–106; and Wu, 90, 114, 120, 121–122, 129, 136
Chen, James, 133, 134, 135
Chen Jitang, 105, 124–126, 139–140, 152
Chen Yi, 3, 30–32, 40f; corruption and administration problems, 41–42, 45; and early post-colonial
Taiwan, 35–54; and February 1947 incident, 4, 40, 45–49, 50; as governor of Fujian province,
30, 31, 35; Wei Daoming replacing, 54, 55
Cheng Qian, 106
Chennault, Claire, 113, 136, 154, 214
Chiang Ching-kuo, 53, 77, 93f, 118, 135, 136, 162, 180; military influence of, 193; political
commissar system of, 186, 193; requesting U.S. aid, 226; and Sun, 186; and Wu, 186–187
Chiang Kai-shek: aid from U.S. to, 113–114; air force officers demanding concessions from, 91;
assassination plans, 123; and Cairo Conference, 3, 14, 18, 19; Chase meeting with, 190f, 228;
and Chen Cheng, 6, 79, 81, 82, 90–97, 104–105, 106, 265n99; and Chen Yi, 30, 31, 35, 40, 42,
44–45, 47–48, 49, 52, 53; China’s Destiny, 18; considering pro-Moscow policy, 85; and
Cooke, 8, 144–157, 161–169; coup plans against, 7, 120, 121, 159–161, 162, 171, 201–202,
290n66; criticisms of KMT, 135; death of, 239; declining influence of, 82–99; and Dongshan
peninsula raid, 217–218; early postwar visit to Taiwan (1946), 43–44, 44f; and February 1947
incident, 4, 47–48, 49, 51; first visit to Taiwan (1921), 15; and Formosa League for Re-
emancipation, 133, 134–135; in Guangzhou, 92, 100; and Hainan Island abandonment, 126,
140; and Hainan Island recovery plans, 205, 206–207, 225–226; as head of KMT party, 54, 83;
hoping for World War III, 9, 174, 203; on Japanese legacy in Taiwan, 43; Japanese military
advisors of, 116, 219–222; Jotaro meeting with (1927), 15–16; and Kai plan, 223–225, 226,
227; and KMT Extraordinary Committee, 100; and Korean War, 173–174, 177, 196–197, 202–
204, 216; and Legislative Yuan election (1948), 75; Li meeting with (1949), 89, 100; on lost
territories, 15, 16; Lu Hun planning kidnapping of, 118; and MacArthur, 98, 143, 156, 161–163,
171, 174–176, 175f, 204; and mainland recovery strategies (See Mainland recovery
strategies); on Manchuria situation, 44; maritime strategies, 197–198, 207–209, 217–218; and
marooned Nationalist forces on mainland, 136, 139; and Military Assistance Advisory Group,
188–194; military budget under, 188–193; military defeat in North China, 58, 61; military
 transformation under, 187–195; and mutual defense treaty with U.S., 226–234; Nix meeting
with (1950), 157–158; Northern Expedition of, 15; opposing negotiations with Communists, 43;
and patron-client state relationship with U.S., 12, 173; and peace negotiations with Japan,
178–179; Philippines visit (1949), 101–102, 103f; on postwar restoration of Chinese territories,
18–19, 20; and Quirino, 101–102, 103f; reforms of, 135–136, 166, 180–183, 187–188, 240;
resignation/retirement from presidency, 5–6, 74, 75, 77, 78, 82–99; resuming presidency, 120–
122, 123, 136, 144; retreat to Taiwan, 1, 119; Rhee meeting with (1949), 102–104, 104f;
selecting Guangdong Province as Nationalist base on mainland, 62; and Soong, 64, 67, 68, 90;
South Korea visit, 102–104; and STP program of Cooke, 8; strategic triangle in Southeast
China, 6, 85–86, 92, 96; stress and insomnia of, 263n66; and Stuart, 53, 61; and Sun, 10, 60–61,
80, 88, 96, 105, 113, 123, 185–186, 202, 290n66; Taiwan as territorial refuge for, 77–78; and
Third Force Chinese, 7, 8, 184–185, 197; transferring national reserves out of Shanghai, 77,
82–83, 139, 265–266nn2–3; and Truman administration, 73–74, 128–129, 157–161, 176; on
uncertain status of Taiwan, 172–173; and UN resolution on Taiwan, 176–177; U.S. policy of
limited support for, 69, 74; as war criminal, 89; and Wedemeyer, 90; and Wu, 186–187; and
Yunnan independence movement, 114–118; and Yunnan power struggle, 109–112; Zhang
meeting with, 84–85
Chiang Kai-shek, Madame, 43–44, 44f, 97, 98, 113, 208, 263n66; Washington visit, 73–74, 77
China: civil war in (See Civil war, Chinese); constitutions drafted, 16; Nationalist (See Nationalist
China); one-China policy, 2; People’s Republic of (See People’s Republic of China); at war
with Japan, 3, 15, 16–17, 19, 249n1
China Democratic Revolutionary Party, 135
China’s Destiny (Chiang Kai-shek), 18
China White Paper, 59, 113
Chinese Communist Party (CCP), 1, 8–9; Chiang opposing negotiations with, 43; in civil war with
Nationalists (See Civil war, Chinese); on Hainan Island, 68; in Manchuria, 44; Marshall
negotiations with, 43, 45; military of (See Military of Chinese Communists); peace negotiations
with Chinese Nationalists, 74, 75, 84, 89; Peng meeting with representatives of, 97
Chinese Maritime Customs Service, 93, 268n43, 279n10
Chinese Nationalist Party (Kuomintang or KMT), 1; Centrally Administered Taiwan Executive
Committee, 17; Central Organization Department, 17; Central Party Headquarters, 17; Central
Reform Committee, 93f, 180–183, 181f, 201; Chiang Kai-shek as head of, 54, 83; in civil war
with Communists (See Civil war, Chinese); Extraordinary Committee, 100; Guangdong
Province selected as mainland base for, 61–62; Investigation and Statistic Bureau, 133; Kerr
on, 87; Marshall negotiations with, 43, 45; military of (See Military of Chinese Nationalists);
national security campaigns, 8, 162; peace negotiations with Chinese Communists, 74, 75, 84,
89; in South China, 62–68
Chinese Titoism, 5, 9, 129, 170, 171
Churchill, Winston, 3, 19–20
CIA (Central Intelligence Agency), 102; assassination plot of, 98; and Li Mi forces in Burma,
211–213; and mainland coastal raids, 207; on separatist movements in China, 70; and
Southeast Asia Defense Supplies Corporation, 212, 213; on survival potential of non-
Communist regional regimes, 108–109; and Third Force Chinese, 184; and Western
Enterprises Incorporated (WEI), 207–209
Civil Air Transport, 136, 214
Civil war, Chinese, 1, 2, 5, 47; Bai control of Central China in, 83, 84, 101, 106–107, 266n7;
British expectations on outcome of, 68–69; Dachens Island in, 232, 235, 236; defection of
Nationalist forces in, 106; Dongshan peninsula in, 217–218; and February 1947 incident in
 Taiwan, 47, 48; Guangdong Province selected as Nationalist base in, 61–62; Hainan Island in,
123–127, 152–154 (See also Hainan Island); marooned Nationalist forces on mainland in,
136–139; Marshall negotiations on, 43, 44, 45–46; Nationalist defense of Xichang in, 118, 119,
136–137; Nationalist successes in (1949), 101; nonintervention policies of Truman
administration in, 7, 128–129, 141, 158, 170; North China strength of Communists in, 58, 61,
73; peace negotiations in, 74, 75, 84, 89; and regionalism trend, 69–72; Shandong Province
campaign (1947), 58, 68; South China as anti-communist base in, 60–67, 70; southern advance
of Communists (1949), 89–90, 91; strategic triangle in Southeast China of Chiang in, 85–86,
92, 96; Yunnan in, 7, 109–112, 114–118; Zhoushan Islands in, 150–152
Clark, Lewis, 91–92, 101, 107, 130
Cold War, 2, 5, 9; in East Asia, 12, 137, 231; in Europe, 128; security interests of Taiwan in, 194;
Taiwan Strait in, 228
Colonial Taiwan, 2, 14–34
Commerce International China, Inc. (CIC), 164, 165, 167, 168; and Special Technician Program,
145–150
Cooke, Charles M., 140, 144–157, 145f, 161–169, 170, 240; on Hainan Island recapture, 203,
204–205; on Hainan Island withdrawal, 152–154, 155, 157; as messenger for Chiang, 156–
157, 161; and Military Assistance Advisory Group, 164; on military reorganization, 166, 188;
on Nationalist forces in Korean War, 174; on Nationalist navy, 198, 294n9; Special Technician
Program of, 8, 145–150, 163–169; and Sun, 149f; on Zhoushan Islands withdrawal, 150–152,
155, 157, 166
Corruption, 41–42, 45, 98, 168
Coup plans against Chiang, 7, 120, 121, 159–161, 162, 171, 201–202, 290n66
Currency, 39, 46, 65, 90, 93, 94
Customs services system in China, maritime, 93, 268n43

Dachens Islands, 232, 235–236

Democracy in Taiwan, Chiang plan for, 135
Dongshan peninsula, 217–218
Dulles, John Foster, 159, 161, 162, 225; and mutual defense treaty with Taiwan, 226–230, 232,
233, 237; on Taiwan Strait crisis, 236

Economic Cooperation Administration (ECA), 79, 86, 101, 189, 191, 193, 265n95
Economic Stabilization Board, 189, 192, 193
Economy of mainland China, 65–66, 90, 94, 238
Economy of Taiwan, 4, 90, 93–94; in early post-colonial period, 39–41, 42, 45, 46, 52, 55–56; ESB
establishing policies on, 193; Japanese assets in, 39, 41; Kerr on, 52, 57; Liao request for U.S.
aid to, 131; military expenses affecting, 139; report to Wedemeyer on (1947), 59; separation
from mainland China, 94; stabilization of, 192
Edgar, Donald, 88, 132
Eisenhower administration, 9, 209, 211, 239; and Chiang Kai-shek, 222, 223; deneutralization of
Taiwan Strait, 217; mutual defense treaty with Taiwan, 226–234, 236–237; negotiations with
Communists, 216; Taiwan Strait crisis during, 236; Vietnam negotiations during, 225
Elections, local, implementation of, 182–183
Executive Yuan, 119, 147, 188

Fassoulis, S. G., 145, 146

FBI investigation of military supplies procurement, 168
February 1947 incident, 4, 40, 45–56, 240, 257nn48–51; political and economic reorganization
after, 54–56; U.S. role in, 49–54
Fechteler, William, 206–207
Feng Baiju, 68, 264n20
Flying Arrow shelling, 198
Food production and distribution in early post-colonial period, 41, 45, 46
Formosa League for Re-emancipation (FLR), 129–135, 185
Formosan National Defense Army, 131
Formosa Resolution, 236–237
Formosa Unit, New York-based, 24–25
Fox, Alonzo, 175; report of, 175, 189, 198
France, in Vietnam, 138, 210–211, 225
Free China, 2, 154, 192, 204, 215
Fu Jingbo, 74
Fujian province, 30, 31, 35, 205–206

Gan Jiehou, 121, 125

Geneva Conference (1954), 226
Great Leap Forward, 238
Guangdong Province, 62–68, 89–90
Guang military plan, 221–222, 223
Guangxi Clique, 7, 80, 105, 111, 125; aid from U.S. to, 113; anti-Chiang elements in, 74, 84; and
Chen Cheng, 6, 92, 95; in Vietnam, 210
Guangzhou, 6, 89, 92, 95; Nationalist defense of, 100–101, 115; as Nationalist headquarters, 62,
66, 89; Soong in, 62, 63, 64, 65, 66
Guerrilla activity, anti-communist, 8, 156, 200–201; U.S. covert support of, 203, 207, 208, 209; in
Yunnan, 212
Guerrilla activity, Communist, 68
Gui Yongqing, 152

Hainan Island, 7, 25, 123–127, 139–140; abandonment of, 8, 126–127, 140, 152–154, 155; as anti-
Communist stronghold, 125–126; Chiang supporting recovery plan, 225–226; Communist
control of, 153; Cooke on recapture of, 203, 204–205; Cooke on withdrawal from, 152–154,
155, 157; established as separate province, 66–67; Feng Baiju as Communist leader on, 68,
264n20; and Soong, 66, 67; strategic importance of, 125, 205, 206; U.S. encouraging military
operations on, 10, 205–207; and Zhang, 66–67
Half-mountain people, 17, 31, 33, 34, 54, 134
Hu Shi, 161, 283n76
Hu Weida, 63
Hu Zongnan, 85, 101, 108, 111, 118, 136–137, 208
Huang Chaoqin, 33
Huang Jie, 137, 138
Huang, Peter, 130–132, 135
Hunan Province, defection of Nationalist forces in, 106

Island X, 24

Jacobs-Larkcom, E. H., 207, 217

Japan, 15–16, 43; China at war with, 3, 15, 16–17, 19, 249n1; military advisors in Taiwan from,
116, 219–222; peace negotiations and treaty with, 5, 11, 177–180; POW camps in Taiwan, 36;
surrender of, 2, 3–4, 23, 29, 35, 37; Taiwan as colony of, 2, 14–34
Jessup, John K., 21
Jessup, Philip C., 159
Jiang Biao, 65, 147
Johnson, Louis, 107, 108, 121, 155, 161, 162, 174
Joint Strategic Plans Committee (U.S.), 199–201
Jotaro, Yamamoto, 15–16
Judd, Walter, 154, 155, 168

Kai plan, 223–225, 226, 227

Ke Taishan, 33
Kennan, George, 97–98, 170, 198–199
Kerr, George H., 41, 42, 59, 87, 240; and Chen Yi, 37, 41, 42, 51–52; departure from Taiwan, 52,
57; on economic aid to Taiwan, 52, 57; and February 1947 incident, 4, 50, 51–52, 53, 57, 240;
in Formosa Unit, 24; memorandum on Taiwan, 52–54; and petition letter to Marshall, 49–50;
on postwar plans for Taiwan, 4–5, 21–22, 38, 42; and Wei Daoming, 55
Khampa Tibetans, 110
Kim Il Sung, 172, 173
KMT (Kuomintang). See Chinese Nationalist Party
Knowland, William, 125, 146, 147, 154
Koo, V. K. Wellington, 107, 121, 210–211, 226
Korea, 16, 17, 102–104, 172–174, 226
Korean War, 1, 172–174; Communist Chinese intervention in, 177, 178, 196–197, 198, 207; end
of, 10, 11, 209, 215, 216, 223; and Hainan Island recovery strategies, 206; and mainland
recovery strategies, 9–10, 196, 202–204; and Military Assistance Advisory Group, 163; and
Nationalist forces in Burma and Vietnam, 11, 138; potential role of Nationalist forces in, 165,
174, 196, 197, 199, 203, 222, 223; and STP program of Cooke, 8, 163, 165, 170; and strategic
importance of Taiwan, 173, 197
Kuomintang (KMT). See Chinese Nationalist Party

Land reform measures, 95, 183

Land-to-the-Tiller Act (1953), 183
Lapham, Roger D., 86, 101
Legislative Yuan, 75, 182
Leizhou Peninsula, 225, 226
Li Jishen, 69, 70, 261n48
Li Mi, 110, 137, 138, 211–214, 214f
Li Peiji, 75
Li Zonghuang, 109–111
Li Zongren, 6–7, 79, 80–81, 86, 91–93, 115; anti-communist resistance under, 91, 92, 106–107;
and Chen Cheng, 6, 91–93, 100, 105; in Guangzhou, 6, 89, 92, 100; meeting with Chiang
(1949), 89; meeting with U.S. officials (1950), 121; in peace negotiations with CCP, 75, 84, 89;
in power struggle with Chiang over Yunnan, 111, 112; receiving medical treatment in U.S.,
120; requesting aid from U.S., 107–108; and resignation of Chiang, 74, 75, 83
Liao, Thomas (Liao Wenyi), 129–130, 131, 132, 135, 185
Lim, Frank, 185
Lin Dingli, 133, 134
Little, Lester K., 64, 93, 279n10
Long Yun, 109–110
Lost territories of China, 14–15, 16, 18–19; postwar plans for, 18–19, 20–21, 23–34
Lu Daoyuan, 111
Lu Han, 7, 109–112, 116–118, 119
Lutkins, LaRue R., 116–117, 117f, 118
Luzon attack, 26–27

Ma family, 70–71, 76, 85, 101, 107, 108

MacArthur, Douglas, 8, 46, 72; and Acheson, 172, 175; and Chiang, 98, 143, 156, 161–163, 171,
174–176, 175f, 204; and Cooke, 153, 155, 156–157, 161–163; dismissal of, 168, 204; and
Kennan, 97–98; and Korean War, 174, 196, 203–204; and Luzon attack, 26, 27; and Military
Assistance Advisory Group, 164; on strategic importance of Taiwan, 127, 162, 176; and Sun,
61, 88; Taiwan takeover plan, 98; Taiwan visit (1950), 163, 174–176, 175f, 180
MacDonald, John, 112, 113, 114, 130, 131
Maginot Line, 101, 106
Mainland recovery strategies, 11, 12, 199–206, 209–215, 217–219, 221–226, 237, 238–239; CIA
in, 207–209, 211–213; Cooke plans in, 204–205; Dongshan peninsula raid in, 217–218; Guang
plan, 221–222, 223; guerrilla activities in, 200–201, 203, 207–208; Kai plan in, 223–225;
Korean War affecting, 9–10, 196, 202–204; Li Mi in, 211–214; military supplies requested for,
209–210, 223; U.S. support of, 10, 223
Manchuria, 31, 44; defeat of Nationalist armies in, 73; as lost territory, 14, 15, 18, 19, 20, 21, 23
Manila Conference (1954), 227, 228
Mao Bangchu, 167–168
Mao Zedong, 1, 68, 177; alliance with Soviet Russia, 9, 110, 170, 171, 173; and Dachens attack,
236; Great Leap Forward, 238; on Nationalist forces in Vietnam, 137–138; proposed peace
negotiations with, 74, 75, 84, 89; rejecting UN cease-fire resolution, 199
Maritime strategies of Nationalist military, 197–198, 207–209, 217–218
Marshall, George, 43, 44, 45–46, 49–50, 113, 144
Martial law in Taiwan, 95
Martin, Joseph, 203
Matsu, 236, 237, 238
Menglianggu battle (1947), 58
Merchant, Livingston, 79–81, 87, 159, 265n95
Merrill, Frank, 206
Military Assistance Advisory Group (MAAG), 11–12, 163–164, 168–169, 188–194, 218; and
Japanese military advisors, 220–221; and Kai plan, 224, 225; and mutual defense treaty, 234;
subsidizing repatriation of Nationalist forces, 211; and Sun, 186; and WEI, 209
Military Assistance Program (MAP), 108, 113; 303 funds in, 127, 211
Military of Chinese Communists: advancing into southern China (1949), 89–90, 91, 115, 115f,
267n27; Dachens assault, 232, 235, 236; defection of Nationalist forces to, 106; in Korean
War, 177, 178, 196–197, 198, 207; in Menglianggu campaign, 58; Quemoy bombardment, 227–
228, 229f, 230, 238; in sea warfare, 235–236; Soviet Russia providing supplies to, 153, 157;
strength in North China, 58, 61, 73
Military of Chinese Nationalists: ability to defend Taiwan, 98–99; Air Force officers demanding
concessions from Chiang, 91; Americanization of, 194; and Bai Chongxi in control in Central
China, 83, 84, 101, 106–107, 266n7; Bai opposing Chiang over maneuvers of, 75; in Burma, 11,
 137, 138, 211–215; Chiang losing influence in, 96–98; Chiang placing associates in key
positions in, 82; Cooke recommendations on reorganization of, 166, 188; in Dachens Island
defense, 236; defeat in North China, 58, 61, 73; defection to Chinese Communist forces, 106;
defensive nature of, 10, 204, 218, 233, 237; deployed to Quemoy and Matsu, 238; in Dongshan
peninsula raid, 217–218; in early post-colonial period, 37; Guang plan, 221–222, 223; on
Hainan Island, 139–140, 152–154; Hainan Island recovery plans, 205–207, 225–226;
institutional reform under Chiang, 187–188; Japanese advisors to, 116, 219–222; mainland
recovery strategies, 199–206, 209–215, 217–219, 221–226, 237; maritime strategies, 197–198,
207–209, 217–218; marooned on mainland, 136–139; and Military Assistance Advisory Group,
188–194, 218; naval capacity of, 198; potential role in Korean War, 165, 174, 196, 197, 199,
203, 222, 223; in response to February 1947 incident, 48, 51; revenue and expenses of, 136,
139, 188–193; in sea warfare, 235–236; in Shandong Province campaign (1947), 58, 68; of
Soong, 64–65, 68; Special Technician Program providing assistance to, 145–150, 163; Sun
training program for, 60–61, 63, 114; transition to U.S. control of, 10, 12; treaty with U.S.
limiting operations of, 232–233; in Vietnam, 11, 124, 137–138, 210–211, 297n61; WEI training
program for, 208; on Zhoushan Islands, 150–152
Military of United States: bases and installations on Taiwan, 11–12, 24, 194, 231; in early post-
colonial Taiwan, 36; evacuation of POWs from Taiwan, 36; invasion plans for Taiwan and
Luzon, 26–27; Joint Strategic Plans Committee report on possible actions of, 199–201;
operations against Japanese facilities in Taiwan, 23, 25; planning postwar occupation of
Taiwan, 24–26; Seventh Fleet in (See Seventh Fleet); supporting non-Communist regime in
Taiwan, 78–79
Military supplies, 142; Chiang requesting, for mainland counteroffensive, 209–210; Cooke
acquiring, 8, 145–150, 163, 166–168; in coup plans against Chiang, 160; for Li Mi and forces in
Burma, 213, 214; Soong acquiring, 64–65, 68, 260n30
Mongolia, 70
Muslims, 83, 119
Mutual defense pact (Taiwan and U.S.), 10, 11–12, 223, 226–237, 239

Naosuke, Tomita, 116, 219, 220, 222

National Defense Council, 188, 193
Nationalist China: and Cairo Conference, 14, 19; and early post-colonial Taiwan, 35–56;
establishing consulate general in Taiwan, 16, 249n9; February 1947 uprising against, 46–49; in
negotiations with Japan, 178–180; and postwar plans for Taiwan, 14–34; privatization of U.S.
policies toward, 8, 141–169, 240; reformulating U.S. policy toward, 57–81;
resignation/retirement of Chiang from presidency of, 5–6, 74, 75, 77, 78, 82–99; Taiwan as lost
territory of, 14–15, 16, 18, 19, 20–21; Taiwan as seat of, 2; viewed as legal government for all
of China, 179, 182
National Security Council 48 policy paper, 127–128, 170
National Security Council 68 policy paper, 171
Navy, Nationalist, 198, 294n9
Navy, United States, 26–27, 36; Seventh Fleet of (See Seventh Fleet)
Nimitz, Chester, 26–27
Nitze, Paul, 159, 171
Nix, Karl W. V., 157–158
North China: independence of Outer Mongolia in, 70; military defeat of Nationalists in, 58, 61, 73;
regional leaders in, 76
Northern Expedition, 15
North Korea, 172

Occupation of Taiwan by Japan, 14–34

Office of Strategic Services (OSS), 36, 41, 146
Okinawa, 27, 28
One-China policy, 2
Operation cleanup in Yunnan, 112
Operation Ichigo, 27
Operation Paper, 212
Oracle plan, 229–232
Osborn, David L., 132

Pacific Union proposal, 101

Patron-client state relationship, 12, 173
Pawley, William, 141–142, 145
Pearl Harbor attack, 15
Peng Mengqi, 97, 106
People’s Liberation Army (PLA), 58, 84, 115, 115f. See also Military of Chinese Communists
People’s Republic of China (PRC), 2, 5, 10, 13; admission into UN, 230; expected invasion of
Taiwan, 141; in Korean War, 178, 196, 210; and mainland recovery strategies, 199, 236;
military of (See Military of Chinese Communists); Nationalist’s efforts to involve U.S. in war
with, 196, 201, 238; Taiwan as territory of, 2; U.S. policy toward, 10, 179, 199, 230, 236
Pescadores, 3, 14, 16, 19; in mutual defense treaty of Taiwan and U.S., 232, 233, 234, 235, 236–
237
Petroleum refinery project, 39
Philippines, 26–27, 101–102, 103f, 147, 148
Political commissar system of Chiang Ching-kuo, 186, 193
Political Science Clique, 30–31
Post-colonial Taiwan, early, 35–56
Postwar plans for Taiwan, 14–34; Cairo Conference on, 3, 14, 18, 30; as distinctive colonial
environment, 32–33; as experimental province of China, 33; as frontier territory, 33; half-
mountain people in, 31, 33, 34, 54; Kerr on, 4–5, 21–22, 38, 42; and lost territories, 14–15, 18–
19, 20–21, 23–34; Okinawa capture affecting, 28; as regular province of China, 54; as special
province, 33–34; of Taiwan Investigation Committee, 30, 31, 33, 34; training of new
government bureaucrats for, 32, 33; in trans-Pacific highway concept, 20, 22; trusteeship
arrangements in, 4, 5, 23, 41, 51, 53, 59, 60, 87, 159, 160; U.S. role in, 19–29, 38
Potsdam Proclamation, 23
Prisoners of war evacuated from Taiwan, 36
Privatization of U.S. policies, 8, 141–169, 240; Cooke in, 144–157, 161–169; STP in, 145–150;
volunteer groups in, 146

Qiu Changwei, 91
Qiu Niantai, 132, 185
Quemoy, 114, 123, 133, 165; deployment of Nationalist forces to, 238; omission from mutual
defense treaty, 236, 237; PLA bombardment of, 227–228, 229f, 230, 238
Quirino, Elpidio, 101–102, 103f

Radar systems, 142, 166–167, 168

Radford, Arthur, 206, 207, 223, 224, 230
Rankin, Karl L., 179, 190–192, 193, 203, 210, 214, 222, 227; Chiang meeting with (1954), 228;
and Kai plan, 224; and mutual defense pact of U.S. and Taiwan, 230, 234
Reforms in Taiwan, 4, 9, 105; after February 1947 incident, 54–56, 240; of Chiang, 135–136, 166,
180–183, 187–188, 240; land reform measures in, 95, 183; in local elections, 182–183; of Wu,
132
Regionalism in China, 5, 69–72, 76; and U.S. aid to regional leaders, 7, 71, 109, 110, 113, 116, 124
Republic of China, 2, 5–6, 8, 180, 237. See also Nationalist China; Cairo Conference on lost
territories of, 19; viewed as legal government for all of China, 179, 182
Rhee, Syngman, 102–104, 104f, 172, 216
Robertson, Walter, 227, 230, 232
Roosevelt, Franklin D., 18, 19, 23, 239; and Cairo Conference, 3, 14, 19–20
Rusk, Dean, 143, 159, 161, 189, 210
Ryukyu Islands, 16, 18–19, 20

Sebald, William J., 130

Seventh Fleet (U.S.), 36; Cooke commanding, 144, 152; and PLA submarines, 236; in Taiwan
Strait, 9, 152, 163, 172, 175, 198
Shandong Province, civil war campaign in (1947), 58, 68
Shao Yulin, 21, 173
Sherman, Forrest, 148, 149
Short, Irving, 146–147
Sino-Japanese peace negotiations and treaty, 179–180
Sino-Soviet treaty (1950), 170, 171
Soft power of Taiwan, 235
Soong, T. V., 20, 21, 22, 34, 44, 53; acquiring military supplies, 64–65, 68, 260n30; and Chiang, 64,
67, 68, 90; as governor of Guangdong Province, 62–68, 70; and Hainan Islands, 66, 67;
inspecting Guangdong provincial garrison force, 63f; opinion in U.S. of, 76–77; requesting
American aid, 64; unauthorized plane purchase, 65, 260n30; as war criminal, 89; water police
established by, 64
South China: as anti-communist base, 60–67, 68, 70, 100–101, 108; Britain encouraging separatist
movement in, 69; Communists advancing into (1949), 89–90, 91, 115, 115f, 267n27; Soong as
leader in, 62–68, 70, 76–77; in strategic triangle of Chiang, 6, 85–86, 96
Southeast Asia Defense Supplies Corporation, 212, 213
Southeast Asia Treaty Organization (SEATO), 227, 228
South Korea, 102–104, 172, 173, 226
Soviet Russia, 170–171; Mao forming alliance with, 9, 110, 170, 171, 173; providing supplies to
Chinese Communists, 153, 157; Zhang encouraging relationship with, 84–85
Special Technician Program (STP), 8, 145–150, 163–169
Sprouse, Philip D., 60, 159
State-War-Navy Coordinating Committee report (1947), 60
Stilwell, Joseph, 36, 206
Strong, Robert, 107, 122, 143, 279n10; and Cooke, 155–156, 163; and Formosa League for Re-
emancipation, 132, 133
Stuart, John Leighton, 51, 52, 55, 79, 81, 113; and Bai Chongxi, 83–84; Chiang meeting with, 53,
61; Fu as adopted son of, 74; inspecting Hainan Island, 67; Ma meeting with, 71; on
regionalism in China, 69, 71; rejecting aid request of Soong, 64
Sun Fo, 21
Sun Liren, 6, 8, 265n99, 290n66; and Chen Cheng, 79–81, 88, 105–106; as commander of
Nationalist Ground Forces, 122; complaints about Chiang, 105; and Cooke, 149f; cooperation
of Wu with, 120; and coup plans against Chiang, 120, 159, 160, 161, 290n66; defiance of
Chiang, 96; dismissal of, 227; house arrest of, 186; and Huang, 130, 131; and Japanese military
advisors, 220–221; loyalty to Chiang, 88; and MacArthur, 61, 88; military training program of,
60–61, 63, 114; mistrust of Chiang for, 123; and Soong, 63; support in U.S. for, 10, 79–81, 87–
89, 97, 99, 113, 114, 122, 123, 185–186, 202; as Virginia Military Institute graduate, 61, 81, 88,
267n23
Sun Yat-sen, 15, 16, 21, 40
Supreme Commander for Allied Powers (SCAP), 46, 72, 80; alleged Taiwan takeover plan, 98,
112, 131; Chiang seeking assistance from, 85, 143; and Cooke, 149–150, 156, 157, 163;
criticisms of Chiang, 98; and Formosa League for Re-emancipation, 130; and Military
Assistance Advisory Group, 164; support for Chiang, 143; support for Sun, 80, 81, 88; and
trusteeship plans for Taiwan, 87, 97

Taiwan: as accidental state, 2, 9, 12, 29, 56, 119, 162, 173, 183, 239, 240; Chen Cheng as governor
of, 77, 82, 90–97; Chiang retreating to, 1, 119; Chiang transferring national reserves to, 77, 82–
83, 139, 265–266nn2–3; Communist military threat to, 98–99, 154; criticisms of U.S. in, 72;
defensive nature of military, 10, 204, 218, 233, 237; early post-colonial period in, 35–56;
economy of (See Economy of Taiwan); and Formosa League for Re-emancipation (FLR),
129–135; independence movement in, 7–8, 129–135, 158, 185; as Japanese colony, 2, 14–34;
Japanese POW camps in, 36; as lost territory, 14–15, 16, 18, 19, 20–21; MacArthur visit
(1950), 163, 174–176, 175f, 180; martial law in, 95; Merchant mission in (1949), 79–81, 87,
265n95; mutual defense pact with U.S., 10, 11–12, 223, 226–237, 239; Nationalist Chinese
Consulate General in, 16, 249n9; in patron-client state relationship with U.S., 12, 173; peace
negotiations and treaty with Japan, 11, 178, 179–180; postwar plans for, 14–34 (See also
Postwar plans for Taiwan); privatizing U.S. policy toward, 141–169; reforms in (See Reforms
in Taiwan); reformulating U.S. policy toward (1947–1949), 57–81; SCAP plan for takeover of,
98, 112, 131; soft power of, 235; STP program in, 8, 145–150, 163–169; strategic importance
of, 3, 18, 21, 27, 38, 78, 127, 157, 162, 171, 173, 176, 197; in strategic triangle of Chiang, 85, 86,
96; as territorial refuge for Chiang, 77–78; uncertain status of, 18, 23, 32, 98, 99, 129, 172–
173; U.S. military bases and installations on, 11–12, 24, 194, 231; U.S. military operations
against Japanese facilities in, 23, 25; Wedemeyer fact-finding mission in (1947), 58–60, 129;
white terror in, 162, 185
Taiwanese Democratic People’s Association, 133, 134
Taiwanese islanders: in early post-colonial period, 41, 45, 55, 56; in February 1947 incident, 4; as
half-mountain people, 17; U.S. supporters for governing role of, 86–87
Taiwan Investigation Committee, 30, 31, 33, 34
Taiwan Party Headquarters Preparatory Office, 17–18
Taiwan Strait, 173, 174, 217; U.S. Seventh Fleet in, 9, 152, 163, 172, 175, 198
Tang Enbo, 82, 84, 86, 89, 90, 96, 104, 105; request to Chiang for new army, 219, 220; and
strategic triangle of Chiang, 85, 86, 90
Thailand, 138, 212, 214
Third Force movement, 7, 8, 184–185, 197, 283n76, 289n54
3–7–5 military plan, 205
303 funds in Military Assistance Program, 127, 211
Three People’s Principles (Sun Yat-sen), 16
Time-Life-Fortune memorandum on trans-Pacific highway concept, 20, 21
Tingle, G. M., 51
Tito, Broz, 5
Tobacco and Wine Monopoly Bureau, 46
Tong Guanxian, 75, 184
Trans-Pacific highway concept, 20, 22, 171
Truman administration, 73–74, 239; Acheson as secretary of state in, 79, 128–129, 141; anti-
Communism efforts of Soong during, 70; and Chen Yi administration, 35; and Chiang Kai-
shek, 73–74, 128–129, 157–161, 176; and coup plans against Chiang Kai-shek, 159–161; and
Formosa League for Re-emancipation, 132; and Korean War, 9, 172, 174, 176, 196, 198, 199,
203; Li meeting with officials from (1950), 121; Marshall as secretary of state in, 49;
nonintervention policies of, 7, 128–129, 141, 143, 158, 170; peace negotiations during, 179;
privatizing U.S. policies during, 141–142; Taiwan policies in, 5–6, 7, 9, 128–129; Wedemeyer
fact-finding mission during, 58–60
Trusteeship plans for Taiwan, 4, 5, 23, 41, 51, 53, 59, 60, 87, 159, 160
27 Brigade, 46

United Nations: admission of PRC into, 230; Oracle plan of, 229–232; petition for intervention in
Taiwan, 50; proposed resolution on Taiwan in, 176–177; in trans-Pacific highway concept, 20;
in trusteeship plan for Taiwan, 51, 53, 59, 60, 87, 159, 160
United Nations Relief and Rehabilitation Administration (UNRRA), 45, 51, 67
United States: aid from (See Aid from U.S.); and Baituan military training program, 220–221; in
Cairo Conference, 3, 14, 19–20; and Chinese Communist relations, 8–9; and coup plans
against Chiang, 159–161, 201–202; and early post-colonial Taiwan, 35–38, 39, 42–43, 49–54;
Eisenhower administration in (See Eisenhower administration); and February 1947 incident,
49–54; and Formosa League for Re-emancipation, 130–133; and Hainan Island recapture
plans, 10, 205–207; and Korean War, 172–174, 198–199, 216; and Li Mi forces in Burma,
211–215; limited support for Chiang Kai-shek in, 69, 74; Luzon and Taiwan invasion plans, 26–
27; and mainland recovery strategies, 10, 223; and Merchant mission in Taiwan (1949), 79–81,
265n95; Military Assistance Advisory Group, 188–194; military of (See Military of United
States); mutual defense pact with Taiwan, 10, 11–12, 223, 235, 236–237, 239; National
Security Council 48 policy paper, 127–128, 170; National Security Council 68 policy paper,
171; in patron-client state relationship with Taiwan, 12, 173; in peace negotiations, 178; policy
of “no-policy” for Taiwan, 57, 59; and postwar plans for Taiwan, 19–29, 38; privatizing policy
toward Nationalist China, 141–169; on protection of Taiwan from Communists, 72–73, 78–79;
reformulating Taiwan policy (1947–1949), 57–81; and regionalism trend in China, 69–72, 76;
and resumption of Chiang presidency, 120–122; strategic importance of Taiwan to, 3, 38, 78,
127, 157, 162, 171, 173, 176, 197; Sun support in, 10, 79–81, 87–89, 97, 99, 113, 114, 122, 123,
185–186, 202; support for native Taiwan islanders in, 86–87; supporting non-Communist
regime in Taiwan, 78–79; and Third Force Chinese, 184, 197; Truman administration in (See
Truman administration); Wu support in, 186, 290n68; and Yunnan independence movement, 7,
116–118

Vanderpuyl, Henry, 143, 279n10

Vietnam, 16, 225; Nationalist forces in, 11, 124, 137–138, 210–211, 297n61
Virginia Military Institute, Sun as graduate of, 61, 81, 88, 267n23

Wedemeyer, Albert, 36, 38, 58–60, 90, 113, 114, 129

Wei Daoming, 54, 55, 56, 58–59, 72
Welles, Sumner, 21, 22
Weng Wenhao, 39, 66
Western Enterprises Incorporated (WEI), 207–209, 218, 296n52
White terror of Taiwan, 162, 185
Wilson, Charles E., 225, 229
World Commerce Corporation, 145–146
World War II, 3, 26–27, 28, 249n1; bombing of Japanese facilities in Taiwan during, 23, 25;
Japanese POW camps in Taiwan during, 36; and postwar plans for Taiwan (See Postwar
plans for Taiwan); surrender of Japan in, 2, 3–4, 23, 29, 35, 37
World War III, 9, 124, 165, 174, 203
Wu, K. C. (Wu Guozhen), 6, 8, 81, 90; complaints of Chen about, 129; embezzlement charge
against, 187; and Formosa League for Re-emancipation, 132–133, 135; in KMT Director-
General’s Office, 102; power struggle with Chen, 121–122, 136; reforms of, 132; as
replacement for Chen Cheng, 90, 114, 120, 127; support in U.S. for, 186, 290n68; as target of
Chiangs, 186–187
Wu Sanlian, 132, 134, 135
Wu Shi, 123
Wu Songqing, 83
Wu Xingyong, 82–83

Xiang Weixuan, 167–168

Xichang, Nationalist defense of, 118, 119, 136–137
Xue Yue, 126, 139, 153

Yang Zhaojia, 132–133, 134, 135

Yeh, George, 232, 233
Yu Chengwan, 110, 111
Yu Hanmou, 82, 100
Yunnan, 7, 109–112, 114–118, 212–213

Zhang Fakui, 66–67, 70, 184

Zhang Qiyun, 180, 289n44
Zhang Zhizhong, 76, 84–85
Zheng Jiemin, 113, 127, 142, 207
Zhou Zhirou, 91, 96, 123
Zhou Enlai, 43, 138
Zhoushan Islands, 8, 86, 150–152, 151f, 154, 155, 157, 166