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That China request the United Nations to take immediate action to bring about a cessation of hostilities in Manchuria and request that Manchuria be placed under a Five-Power Guardianship or, failing that, under a Trusteeship in accordance with the United Nations Charter.

That China make effective use of her own resources in a program for economic reconstruction and initiate sound fiscal policies leading to reduction of budgetary deficits.

That China give continuing evidence that the urgently required political and military reforms are being implemented.

That China accept American advisors as responsible representatives of the United States Government in specified military and economic fields to assist China in utilizing United States aid in the manner for which it is intended.

129. CHINA AID ACT OF 1948 1

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Foreign Assistance Act of 1948".

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TITLE IV

SEC. 401. This title may be cited as the "China Aid Act of 1948". SEC. 402. Recognizing the intimate economic and other relationships between the United States and China, and recognizing that disruption following in the wake of war is not contained by national frontiers, the Congress finds that the existing situation in China endangers the establishment of a lasting peace, the general welfare and national interest of the United States, and the attainment of the objectives of the United Nations. It is the sense of the Congress that the further evolution in China of principles of individual liberty, free institutions, and genuine independence rests largely upon the continuing development of a strong and democratic national government as the basis for the establishment of sound economic conditions and for stable international economic relationships. Mindful of the advantages which the United States has enjoyed through the existence of a large domestic market with no internal trade barriers, and believing that similar advantages can accrue to China, it is declared to be the policy of the people of the United States to encourage the Republic of China and its people to exert sustained common efforts which will speedily achieve the internal peace and economic stability in China which are essential for lasting peace and prosperity in the world. It is further declared to be the policy of the people of the United States to encourage the Republic of China in its efforts to maintain the genuine independence and the administrative integrity of China, and to sustain and strengthen principles of individual liberty and free institutions in China through a program of assistance based on selfhelp and cooperation: Provided, That no assistance to China herein contemplated shall seriously impair the economic stability of the

1 Public Law 472, 80th Cong., 2d sess., S. 2202.

United States. It is further declared to be the policy of the United States that assistance provided by the United States under this title should at all times be dependent upon cooperation by the Republic of China and its people in furthering the program: Provided further, That assistance furnished under this title shall not be construed as an express or implied assumption by the United States of any responsibility for policies, acts, or undertakings of the Republic of China or for conditions which may prevail in China at any time.

SEC. 403. Aid provided under this title shall be provided under the applicable provisions of the Economic Cooperation Act of 1948 which are consistent with the purposes of this title. It is not the purpose of this title that China, in order to receive aid hereunder, shall adhere to a joint program for European recovery.

SEC. 404. (a) In order to carry out the purposes of this title, there is hereby authorized to be appropriated to the President for aid to China a sum not to exceed $338,000,000 to remain available for obligation for the period of one year following the date of enactment of this Act.

(b) There is also hereby authorized to be appropriated to the President a sum not to exceed $125,000,000 for additional aid to China through grants, on such terms as the President may determine and without regard to the provisions of the Economic Cooperation Act of 1948, to remain available for obligation for the period of one year following the date of enactment of this Act.

SEC. 405. An agreement shall be entered into between China and the United States containing those undertakings by China which the Secretary of State, after consultation with the Administrator for Economic Cooperation, may deem necessary to carry out the purposes of this title and to improve commercial relations with China.

SEC. 406. Notwithstanding the provisions of any other law, the Reconstruction Finance Corporation is authorized and directed, until such time as an appropriation is made pursuant to section 404, to make advances, not to exceed in the aggregate $50,000,000, to carry out the provisions of this title in such manner and in such amounts as the President shall determine. From appropriations authorized under section 404, there shall be repaid without interest to the Reconstruction Finance Corporation the advances made by it under the authority contained herein. No interest shall be charged on advances made by the Treasury to the Reconstruction Finance Corporation in implementation of this section.

SEC. 407. (a) The Secretary of State, after consultation with the Administrator, is hereby authorized to conclude an agreement with China establishing a Joint Commission on Rural Reconstruction in China, to be composed of two citizens of the United States appointed by the President of the United States and three citizens of China appointed by the President of China. Such Commission shall, subject to the direction and control of the Administrator, formulate and carry out a program for reconstruction in rural areas of China, which shall include such research and training activities as may be necessary or appropriate for such reconstruction: Provided, That assistance furnished under this section shall not be construed as an express or implied assumption by the United States of any responsibility for making any further contributions to carry out the purposes of this

section.

(b) Insofar as practicable, an amount equal to not more than 10 per centum of the funds made available under subsection (a) of section 404 shall be used to carry out the purposes of subsection (a) of this section. Such amount may be in United States dollars, proceeds in Chinese currency from the sale of commodities made available to China with funds authorized under subsection (a) of section 404, or both.

Approved April 3, 1948.

130. A SUMMARY OF AMERICAN-CHINESE RELATIONS Letter From the Secretary of State to the President, July 30, 1949, Transmitting "United States Relations With China, With Special Reference to the Period 1944–1949” 1

THE PRESIDENT: In accordance with your wish, I have had compiled a record of our relations with China, special emphasis being placed on the last five years. This record is being published and will therefore be available to the Congress and to the people of the United States.

Although the compilation is voluminous, it necessarily covers a relatively small part of the relations between China and the United States. Since the beginning of World War II, these relations have involved many Government departments and agencies. The preparation of the full historical record of that period is by no means yet complete. Because of the great current interest in the problems confronting China, I have not delayed publication until the complete analysis could be made of the archives of the National Military Establishment, the Treasury Department, the Lend-Lease Administration, the White House files and many other official sources. However, I instructed those charged with the compilation of this document to present a record which would reveal the salient facts which determined our policy toward China during this period and which reflect the execution of that policy. This is a frank record of an extremely complicated and most unhappy period in the life of a great country to which the United States has long been attached by ties of closest friendship. No available item has been omitted because it contains statements critical of our policy or might be the basis of future criticism. The inherent strength of our system is the responsiveness of the Government to an informed and critical public opinion. It is precisely this informed and critical public opinion which totalitarian governments, whether Rightist or Communist, cannot endure and do not tolerate.

The interest of the people and the Government of the United States in China goes far back into our history. Despite the distance and broad differences in background which separate China and the United States, our friendship for that country has always been intensified by the religious, philanthropic and cultural ties which have united the two peoples, and has been attested by many acts of good will over a period of many years, including the use of the Boxer indemnity for the education of Chinese students, the abolition of extraterritoriality during the Second World War, and our extensive aid to China during

1 The letter transmitting the so-called China White Paper of 1949, Department of State publication 3573, pp. III-XVII.

and since the close of the war. The record shows that the United States has consistently maintained and still maintains those fundamental principles of our foreign policy toward China which include the doctrine of the Open Door, respect for the administrative and territorial integrity of China, and opposition to any foreign domination of China. It is deplorable that respect for the truth in the compilation of this record makes it necessary to publish an account of facts which reveal the distressing situation in that country. I have not felt, however, that publication could be withheld for that reason. The record should be read in the light of conditions prevailing when the events occurred. It must not be forgotten, for example, that throughout World War II we were allied with Russia in the struggle to defeat Germany and Italy, and that a prime object of our policy was to bring Russia into the struggle against Japan in time to be of real value in the prosecution of the war. In this period, military considerations were understandably_predominant over all others. Our most urgent purpose in the Far East was to defeat the common enemy and save the lives of our own men and those of our comrades-inarms, the Chinese included. We should have failed in our manifest duty had we pursued any other course.

In the years since V-J Day, as in the years before Pearl Harbor, military considerations have been secondary to an earnest desire on our part to assist the Chinese people to achieve peace, prosperity and internal stability. The decisions and actions of our Government to promote these aims necessarily were taken on the basis of information available at the time. Throughout this tragic period, it has been fully realized that the material aid, the military and technical assistance, and the good will of the United States, however abundant, could not of themselves put China on her feet. In the last analysis, that can be done only by China herself.

Two factors have played a major role in shaping the destiny of modern China.

The population of China during the eighteenth and nineteenth centuries doubled, thereby creating an unbearable pressure upon the land. The first problem which every Chinese Government has had to face is that of feeding this population. So far none has succeeded. The Kuomintang attempted to solve it by putting many land-reform laws on the statute books. Some of these laws have failed, others have been ignored. In no small measure, the predicament in which the National Government finds itself today is due to its failure to provide China with enough to eat. A large part of the Chinese Communists' propaganda consists of promises that they will solve the land problem. The second major factor which has shaped the pattern of contemporary China is the impact of the West and of Western ideas. For more than three thousand years the Chinese developed their own high culture and civilization, largely untouched by outside influences. Even when subjected to military conquest the Chinese always managed in the end to subdue and absorb the invader. It was natural therefore that they should come to look upon themselves as the center of the world and the highest expression of civilized mankind. Then in the middle of the nineteenth century the heretofore impervious wall of Chinese isolation was breached by the West. These outsiders brought with them aggressiveness, the unparalleled development of Western technology, and a high order of culture which had not accompanied

previous foreign incursions into China. Partly because of these qualities and partly because of the decay of Manchu rule, the Westerners, instead of being absorbed by the Chinese, introduced new ideas which played an important part in stimulating ferment and

unrest.

By the beginning of the twentieth century, the combined force of overpopulation and new ideas set in motion that chain of events which can be called the Chinese revolution. It is one of the most imposing revolutions in recorded history and its outcome and consequences are yet to be foreseen. Out of this revolutionary whirlpool emerged the Kuomintang, first under the leadership of Dr. Sun Yat-sen, and later Generalissimo Chiang Kai-shek, to assume the direction of the revolution. The leadership of the Kuomintang was not challenged until 1927 by the Chinese Communist party which had been organized in the early twenties under the ideological_impetus of the Russian revolution. It should be remembered that Soviet doctrine and practice had a measurable effect upon the thinking and principles of Dr. Sun Yat-sen, particularly in terms of economics and party organization, and that the Kuomintang and the Chinese Communists cooperated until 1927 when the Third International demanded a predominant position in the Government and the army. It was this demand which precipitated the break between the two groups. To a large extent the history of the period between 1927 and 1937 can be written in terms of the struggle for power between the Kuomintang and the Chinese Communists, with the latter apparently fighting a losing battle. During this period the Kuomintang made considerable progress in its efforts to unify the country and to build up the nation's financial and economic strength. Somewhere during this decade, however, the Kuomintang began to lose the dynamism and revolutionary fervor which had created it, while in the Chinese Communists the fervor became fanaticism.

Perhaps largely because of the progress being made in China, the Japanese chose 1937 as the departure point for the conquest of China proper, and the goal of the Chinese people became the expulsion of a brutal and hated invader. Chinese resistance against Japan during the early years of the war compelled the unqualified admiration of freedom-loving peoples throughout the world. Until 1940 this resistance was largely without foreign support. The tragedy of these years of war was that physical and human devastation to a large extent destroyed the emerging middle class which historically has been the backbone and heart of liberalism and democracy.

In contrast also to the unity of the people of China in the war against Japan were the divided interests of the leaders of the Kuomintang and of the Chinese Communists. It became apparent in the early forties that the leaders of the Government, just as much as the Communist leaders, were still as preoccupied with the internal struggle for power as they were with waging war against Japan. Once the United States became a participant in the war, the Kuomintang was apparently convinced of the ultimate defeat of Japan and saw an opportunity to improve its position for a show-down struggle with the Communists. The Communists, for their part, seemed to see in the chaos of China an opportunity to obtain that which had been denied them before the Japanese war, namely, full power in China. This struggle for power in the latter years of the war contributed largely to the partial paralysis of China's ability to resist.

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