The establishment of formal diplomatic relations between the United States and the People's Republic of China on New Year's Day 1979 dramatized an extraordinary year in which East Asia experienced an array of other significant political, social and economic changes. This transformation had been building up over the past decade, gradually sweeping away many of the myths and dogmas on which American policy and practice were predicated for so long. But if history can be said to be marked by decisive moments, 1978 was such a climax. In both its domestic dynamics and attitudes toward the world, the region appears to be entering a fresh phase that will require the formulation of new strategies tailored to new realities.

Five years ago, for example, the economic vitality of the region seemed threatened. It was widely feared that Japan as well as emerging industrial areas such as South Korea, Taiwan, Singapore and Hong Kong would be hard hit by the oil price rise and ensuing global recession, causing them to face serious economic and political dislocations. But they have continued to display remarkable resiliency, and their growth in particular has made East Asia perhaps the most dynamic region in the world economic picture.

Almost four years ago, the collapse of America's client regimes in South Vietnam and Cambodia tested long-standing prophecies that this would throw the rest of Southeast Asia into disarray. Today the "dominoes" that were supposed to topple are now standing more upright than ever, both individually and as members of the Association of Southeast Asian Nations (ASEAN), and their links to the United States are improving even as they seek accommodations with China and with the communist states of Indochina.

It had been prophesied that China in the wake of Communist Party Chairman Mao Tse-tung's death in September 1976 would be nagged endlessly by internecine dissension as opposing factions fought for power as well as to promote their respective domestic and foreign policy doctrines. But with astonishing rapidity, the pragmatists among Mao's successors managed to subdue their radical rivals and supplant his revolutionary dogma with a rational approach to that huge country's enormous dilemmas. And their drive for modernization, along with their quest for security against their Soviet adversaries, has propelled them into unprecedentedly close ties with the Western "imperialists" and Japanese "militarists" whom they once denounced as the enemies of mankind.

It had been thought in the past that China and Japan might compete for influence in East Asia, and thereby contribute to uncertainties in the area. But the Sino-Japanese peace and friendship treaty signed in August, and ceremonially sealed by Chinese Vice Premier Teng Hsiao-ping's visit to Tokyo two months afterward, reinforced a bond that not only strengthens the stability of East Asia, but, to the degree that it curbs Soviet ambitions, also works to the advantage of the United States.

Finally, it was feared that the American setbacks in Vietnam and Cambodia, followed by the Carter Administration's early inclination to relegate East Asia to a minor slot on its roster of priorities, would inspire a progressive loss of faith in the United States throughout the area. But several initiatives, ranging from the President's decision to decelerate the American troop withdrawal from South Korea to the normalization of ties with China - and finally, at the very close of the year, the announcement of agreement with the Philippines on the continued use of U.S. military bases there - have largely served to allay apprehensions that the United States might reduce its responsibilities in the region.

A veteran of the cold war scanning East Asia on the threshold of 1979, then, might be amazed to note that the only military conflicts roiling the region are pitting communist nations against each other. Supplied and supported by Moscow, the Vietnamese and their Cambodian surrogates seized power in Phnom Penh by early January of 1979, thus ousting the Cambodian regime supported by China. Meanwhile, China is confronted on its northern and western frontiers by a buildup of Soviet forces that official U.S. sources describe as both "qualitative and quantitative." These communist enemies, moreover, are exchanging propaganda more virulent than anything they ever hurled at the United States and its allies.

This suggests that the traditional ethnic and national animosities currently coming to the fore would have surfaced earlier had not the United States inadvertently fused Asia's communists by its strategy of "containment," which ran from the encirclement of China and backing for the French struggle to retain Indochina to direct American involvement in Vietnam. Or, as Richard Holbrooke, the Assistant Secretary of State for East Asian and Pacific Affairs, has said: "It would appear in retrospect that the main thing that unified the Asian Communist states in the past was a common opposition to the West - and particularly to the American military presence in Indochina." A senior American diplomat once associated with the Vietnam commitment recently remarked: "We're better off today than if we'd won the war."

It would be a distortion, though, to portray East Asia and the U.S. position there only in glowing technicolor. For there are present and potential problems that threaten the countries of the region and their connections with the United States.

From an American viewpoint, the biggest of these problems is the trade dispute between the United States and Japan, a tangle that defies easy solution. The Carter Administration must still persuade Congress that recognition of China will not endanger Taiwan, and then face basic decisions whether to develop a military aspect to the new relationship. And the disruption of Indochina now menaces the region's equilibrium, since it could conceivably explode into a larger confrontation between the Soviet Union and China, each of which is committed to backing its protégé.


The evolution of China during the year was the most significant single development in the area, if not in the world. For the time being at least, it betokens a decisive choice in a struggle that has raged within the Communist government ever since it took over the mainland in 1949.

After consolidating their authority in the early 1950s, the Communist Chinese leaders set out to construct a strong and secure China. But they lacked capital, and the population under their control was spiraling in Malthusian magnitudes. Though they agreed on goals, they fell almost immediately into a bitter debate over means. The more pragmatic elements argued for institutions, decentralized planning, material rewards, ideological flexibility, and, among other things, the acquisition of foreign technology. The radicals contended that such an approach would inevitably create an elitist bureaucracy of the sort that had corrupted the Soviet Union, and they argued for perpetual class struggle, asserting that growth could be attained by unleashing the "masses" and exhorting them to produce through spiritual incentives.

Mao backed the radicals, especially as advanced age heightened his apprehension that China would slide into "revisionism" after his death. The pragmatists were personified in Teng Hsiao-ping, who believed that progress demanded practical measures rather than political campaigns, and his views were shared by many of his Communist Party and military colleagues. The "struggle between the two lines," to use Mao's phrase, sparked recurrent upheavals as the rival factions sought to promote their respective policies. In the Great Proletarian Cultural Revolution of 1966-69, Mao tried to shatter the entrenched Communist Party apparatus that had resisted him. It was his "last hurrah," and the disruption it caused compelled him to abandon his dream. Teng Hsiao-ping, purged during the Cultural Revolution, reemerged in the spring of 1973 - symbolizing a return at least to moderation, led by Chou En-lai until his death in early 1976 - but was purged again in the spring of 1976 as the radicals counterattacked.

Their fate was sealed when Mao died in September 1976. Within a month, his wife and three of her comrades, the so-called Gang of Four, were arrested, and thousands of their acolytes, most of whom had soared into prominence during the Cultural Revolution, were rounded up throughout the country. Since then the drive against them has continued, finally engulfing Mao himself in 1978. In late November, for the first time in memory, Peking wall posters publicly criticized him for having encouraged the radicals, saying that he had displayed "mistaken judgment about class struggle." Meanwhile, thousands who were indicted during the Cultural Revolution, like Teng Hsiao-ping, have not only been "rehabilitated" but elevated to important jobs. Plainly Teng seeks to exorcise the ghost of Mao from Chinese politics, partly by resorting to the traditional device of using historical allegories to criticize him indirectly and partly by revealing the late Chairman's hitherto secret admissions of his own shortcomings. Consonant with this effort, such relics as the "little red book" of Mao's quotations have been attacked as obsolete and misleading.

These zigzags have left many Chinese disillusioned, cynical and hesitant to identify with any policy out of fear that the pendulum could swing again. At the same time, there are indications that the upper echelons of the leadership group are still not entirely cohesive. Communist Party Chairman Hua Kuo-feng, who was plucked out of obscurity by Mao, has seemed to be more determined to restrain the drive against the radicals than Teng, who, as a two-time victim of the leftists, understandably favors a thorough housecleaning. For similar reasons, Hua has been reluctant to bury Mao's thesis that political purity be primordial.

These differences are complicated by personal and political animosities. Hua, who owes his career to the Cultural Revolution, was directly involved in the early 1976 campaign against Teng, and it must be assumed that a degree of tension remains between them. In addition, generational changes are bound to occur in the leadership, with consequences for the future. Teng is 17 years older than Hua and realizes that he is at a disadvantage in terms of time. He is therefore striving to commit the Peking government to long-range programs designed to continue after his death.

Significantly, the National People's Congress formally adopted in March a ten-year economic plan instead of the usual five-year plan. The plan calls for a forced march toward modernization of agriculture, industry, defense, and science and technology, and its targets are exceptionally ambitious. Grain production, which attained 285 million tons last year, is to be boosted to 400 million tons by 1985. During the same period, 120 new large-scale industrial projects will be constructed, among them ten iron and steel complexes, ten oil and natural gas fields, five harbors, six rail lines and 30 electric power plants. Steel output is to be doubled, to 60 million tons, during the period. Total investment is estimated to run to some $350 billion, and the plan's overall aim is to raise industrial growth to an annual rate of more than ten percent and agricultural growth to a rate of 4.3 percent per year.

Many experts doubt that the plan can succeed, at least in its present form. One question is whether the Chinese can mobilize the capital necessary for investment. Another is whether they have the managerial talents for the task, and yet another obstacle to be hurdled is the lassitude of labor, which has been confused and demoralized by a generation of leaps forward and backward. But the Peking government is going further than it ever has in promoting a liberal approach to development.

Workers have been accorded salary raises, and factory operations are being reformed to lay greater stress on technical expertise. Individual initiative and market forces are being encouraged, along with a reliance on what the Chinese press euphemistically terms "economic means" rather than "purely administrative means." In an unusual appeal published recently, a senior adviser to Teng Hsiao-ping went so far as to recommend the study and emulation of capitalistic methods. Writing in the People's Daily, he said: "The proletariat can and must learn from the bourgeoisie. The socialist system itself is not a guarantee."

The same spirit is being infused into scientists, who were formerly under constant ideological pressure but are now encouraged to conduct their research freely. The educational structure, virtually destroyed during the Cultural Revolution, is being renovated as Maoist injunctions against examinations and admission requirements are being scrapped in favor of teacher and student competence. As part of this reform, thousands of young Chinese are due to go to American, Japanese and West European universities even though the Peking authorities know that many may defect to the attractions of consumer cultures.

But perhaps nothing in this new approach has been as dramatic as Peking's decision to reach abroad for assistance - to "put to use the advanced experience of foreign countries," as Hua Kuo-feng said in his National Day address in October. This move not only reverses Mao's insistence on "self-reliance," but represents a retreat from the age-old concept of China as the "center of the universe," which, as the Ch'ien-lung Emperor told the Earl of Macartney in 1793, "possesses all things in prolific abundance."

Within the past year, the Chinese have signed a total of some $60 billion in deals with foreign firms. This commercial thrust outward began early in the year with an eight-year trade agreement with Japan, under which China would purchase ten billion dollars worth of industrial plants and technology in exchange for oil and coal. Since then, the Chinese have indicated a willingness to go far beyond that figure in additional trade with Japan, and they have signed contracts with British, West German, Dutch, French and American companies to construct steel mills, equip coal mines, expand harbors and provide them with other installations. Consistent with this opening to the West, the Chinese are also bidding for tourists, and soon it will be possible to fly to China aboard Pan American, stay in an Inter-Continental Hotel, eat in a snack bar supervised by McDonald's, wash down the meal with Coca-Cola - and pay for it all with a Diners Club card.

The Chinese are resorting to a variety of schemes to cover the cost of their imports over the long term. They hope to develop their substantial offshore petroleum resources and, with that in mind, have been negotiating with the major American oil companies. Reversing past practice, they have acceded to the idea of borrowing, even though they refuse to use that "capitalistic" term. For example, they have arranged a "deferred payment" schedule with West European suppliers. The Bank of China, a Chinese government institution with branches in London, Hong Kong and Singapore, is also accepting deposits from Western banks that are being used to underwrite deals. The expectation is as well that China will finance its imports from Japan through two Japanese organizations, the semi-official Export-Import Bank of Japan, which extends loans for natural resources development, and the official Overseas Economic Cooperation Fund, the main Japanese vehicle for foreign aid.

Moreover, the Chinese have recently announced that they would accept foreign investments on a minority basis in joint ventures in China, and they are putting money into construction projects in Hong Kong, thereby signaling indirectly that they have no intention of terminating their lease on part of the British colony when it expires in 1997.1 Justifying the Chinese decision to rely on capitalist economies, Teng Hsiao-ping recently offered a characteristic quip: "It's useless for an ugly woman to pretend that she is beautiful. We must face the fact that we are backward."


Paralleling this increased dependence on the outside world to modernize their economy, the Chinese also made strenuous efforts during 1978 to mobilize international political support against their two principal enemies, the Soviet Union and its client, Vietnam. Hua Kuo-feng traveled to North Korea and later to Romania, and Teng Hsiao-ping journeyed to Southeast Asia in the fall. But the most important steps were, of course, the consolidation of new relationships with Japan and the United States.

Treaty negotiations between China and Japan had started as far back as 1974, but then went into abeyance because of Chinese demands that the text feature an "anti-hegemony" clause directed against the Soviet Union. The Japanese resisted this demand, fearing that it would undo their effort to maintain an equidistant stance between Peking and Moscow. But by the summer of 1978, they were ready to accept the treaty for four main reasons.

Earlier in the year, China and Japan had signed a trade accord, and the prospect of profits softened the formerly tough attitude of a segment of the Japanese business community toward Peking. The Soviet Union's bullying tactics, which included continued blunt rejection of Japanese hopes for resolving a dispute over four islands off Hokkaido, also served to drive Japan into China's embrace. In their eagerness to conclude the treaty, the Chinese acceded to Japan's insistence that the "anti-hegemony" clause be matched by a phrase stating that the pact would not affect the relations of the signatories with "third countries." And finally, the United States quietly but firmly urged the Japanese to go ahead with the agreement.2

The treaty was historic in the sense that it formally ended the hostilities between China and Japan that had erupted in 1931, and which would later contribute to the outbreak of World War II. It represented a milestone for the United States, since Americans for the first time in two generations would not be compelled to choose between China and Japan, but could welcome their reconciliation as beneficial to both nations. It was strategically crucial as well, since its setback to Soviet aspirations in East Asia augured an altered balance of power in the region.

Finally, both diplomatically and in overall policy terms, the Sino-Japanese Treaty can now be seen as a prelude to the normalization of relations between the United States and China. On the diplomatic front, the Soviet Union, apparently in reaction to the Sino-Japanese pact, went ahead in November to sign a virtual treaty of alliance with Vietnam - this at a time when frictions between China and Vietnam were acute over a number of issues, including Cambodia and also Vietnam's harsh treatment of ethnic Chinese, which was forcing large numbers to flee the country and seek asylum as "boat people" all around the coastline of Southeast Asia. The fear of being flanked by hostile forces on both its northern and southern borders must surely have been a significant factor in Peking's ensuing handling of normalization with Washington.


This is not the place to review the tortured history of American relations with the Chinese Communists. Recent literature again suggests lost opportunities as far back as 1944 and 1945,3 as well as in the months after October 1949 and before the Korean War drove the two governments into a long period of strong hostility. Even in the mid-1950s there was at least a brief moment when normal relations might have been achieved: in 1956 Chou En-lai publicly pledged Peking to a peaceful resolution of the Taiwan problem, going further than the Chinese leaders have gone now.4 But his offer was rebuffed by John Foster Dulles, who refused to deviate from his policy of "containing" China. So it remained for Richard Nixon to begin in 1971 the process that Jimmy Carter concluded in December 1978.

The famous Shanghai Communiqué of 1972 declared that the United States "does not challenge" the thesis that Chinese on both sides of the Taiwan Strait consider that there is only one China, which includes Taiwan. In effect, the United States was prepared to leave it to the Chinese to settle the Taiwan issue themselves, although the Communiqué further stated America's "interest" in a peaceful solution of the Taiwan problem. Peking's "three conditions" for normalization, on the other hand, were - and remained - recognition of its sovereignty over all China, including Taiwan, abrogation of the U.S. defense pact with the Nationalist regime, and withdrawal of the remaining American forces from the island.

The United States could at any time have accepted Peking's conditions. But, largely for domestic political reasons, no President could take that step without some form of direct or indirect assurance from China that it would not attack Taiwan and that the United States could continue to supply weapons to the island as well as maintain an unofficial representative there, as Japan and other nations do. The Chinese were loath to make these concessions, since the Taiwan question in their eyes was an internal matter.

The Shanghai Communiqué had looked forward to a fairly early normalization, and President Nixon might have hammered out a compromise during his second term, but he was paralyzed by the Watergate scandals. Then President Ford's room for maneuver was restricted by the fall of South Vietnam, with shock waves that seemed for a time to preclude any alteration of the U.S. alliance with Taiwan. Thus the field was open for President Carter, who had repeatedly affirmed his desire for an accord with Peking. But he was preoccupied during his first year in office with other foreign policy problems, such as the Middle East, Africa and talks with the Soviet Union on limiting strategic arms. As a consequence, China was put on the back burner in the early priorities of the new Administration.

That, however, did not deter a small group of specialists within the Administration from examining possible paths toward normalization. The group included Assistant Secretary Holbrooke and Michael Oksenberg, a former Michigan University professor on the National Security Council staff. Working through Secretary of State Cyrus Vance and Zbigniew Brzezinski, the President's National Security Adviser, they persuaded Carter to authorize discussions with the Chinese. Thus, in August 1977, Vance went to Peking on what was dubbed an "exploratory" mission.

As authoritative sources now tell the story - most of it for the first time - Vance's proposals then included a suggestion that, upon recognition of Peking, the American representation on Taiwan take the form of a "liaison office," in effect reversing the diplomatic arrangement that then existed. Moreover, Vance urged that the Chinese explicitly promise not to use force against Taiwan. But Teng Hsiao-ping, whose own stature may have been shaky at the time, rejected both ideas, and the Administration specialists returned to their drawing board.

In September, while continuing to refine normalization scenarios, they enlisted State Department legal experts to draft legislation for preserving economic, trade, cultural and other ties with Taiwan after switching diplomatic recognition to Peking. The United States and Taiwan are bound by some 60 treaties and executive agreements covering matters ranging from loans, investments and tariff privileges to fishing rights and airline accords. The draft legislation was unique in international jurisprudence, since it envisaged U.S. links with a regime on Taiwan that would have lost its status as a national government after normalization. As one State Department official put it afterward: "We were creating an entirely new kind of law."

These moves were made in utmost secrecy, in large measure because the Panama Canal treaty controversy was then raging and the Administration feared leaks that might furnish its opponents with ammunition. For instance, in the summer of 1977 a plan briefly existed to bring Ambassador Leonard Unger home on protracted "leave" from Taiwan in order to signal to Peking that the U.S. diplomatic mission on the island was being downgraded. But when it was felt that his departure might arouse criticism on Capitol Hill, he was sent back to Taiwan.

In April 1978 (as the Panama debate finally moved to its close), the specialists revived the issue, and Vance and Brzezinski handed the President a normalization script proposing January 1, 1979 as a target date. The date was not a deadline, since the Chinese reaction was unforeseeable. Carter approved the proposal, specifying that only Holbrooke and Oksenberg be authorized to work on the project. A month later, Brzezinski went to Peking with three objectives in mind - to emphasize Carter's determination to normalize, to urge that Sino-American economic, scientific, cultural and other relations be improved even if diplomatic relations could not be agreed, and to brief the Chinese on America's overall foreign policy in order to bolster their confidence in the United States.

The Brzezinski trip gave fresh momentum to the Sino-American dialogue, even though it was uncertain at that stage whether the Chinese intended to make the concessions necessary for normalization. In an effort to initiate a "consultative" process with them, Brzezinski furnished the Chinese with details of U.S. strategic arms negotiations with the Soviet Union and also with White House secret memoranda (notably the so-called PRM-10) assessing the overall military and security balance and indicating Administration ideas for specific action. The Chinese, for their part, agreed to go forward with bilateral exchanges despite normalization, thus changing their earlier stance, under which they had held that progress toward formal diplomatic ties was a prerequisite to relations in other fields.

Brzezinski's public performance in Peking provoked the complaint in some quarters that he was gambling on the "China card" against the Soviet Union. Soviet President Leonid Brezhnev called it a "short-sighted and dangerous policy," and his view was echoed by American commentators who raised the question of whose card was being played against whom. "While the United States imagines itself as playing the Chinese card, China intends to play the American card against the Soviet Union," remarked Professor Hans Morgenthau, warning that the game was "fraught with risks" because the Russians might eliminate China as a threat and leave the United States confronted by a single superpower.5

Nevertheless, the Brzezinski trip had tangible results. It paved the way for visits to China by Frank Press, the White House scientific adviser, Secretary of Energy James Schlesinger, Secretary of Agriculture Robert Bergland, Treasury Secretary Michael Blumenthal and Secretary of Commerce Juanita Kreps. In addition, the Chinese agreed to Brzezinski's suggestion for a series of "presentations" on the subject of normalization by Leonard Woodcock, the former chief of the United Automobile Workers, who has represented the United States in Peking since the start of the Carter Administration.

Contrary to some later media accounts, Woodcock did not actually negotiate with the Chinese at that early stage. His assignment, which began in late June, was to spell out the U.S. terms for normalization so that the Chinese could decide on their acceptability. Meanwhile, at a news conference on August 17, President Carter voiced his hope for diplomatic relations "when we're both willing to proceed expeditiously and when we're both willing to accommodate one another's wishes," adding that he could not "impose" normalization on the Chinese but "would have to judge by what their response might be."

Woodcock held most of his meetings with Huang Hua, the urbane Chinese Foreign Minister who had been Edgar Snow's interpreter when Snow interviewed a little-known Communist leader named Mao Tse-tung in Yenan in the 1930s. In Washington, meanwhile, Brzezinski initiated a series of parallel talks with Chai Tse-min, a veteran Chinese diplomat who had recently arrived to head Peking's liaison office in the U.S. capital.

Senior Administration officials proposed at the start that the process be conducted slowly and prudently, so that the Chinese clearly understood the U.S. position on three vital points. First, normalization was contingent on the continuation of arms sales to Taiwan. Secondly, mutual recognition would abort if the Chinese contradicted a public U.S. statement expressing hope for a peaceful solution to the Taiwan problem. And finally, Peking would have to accede to some kind of unofficial American representation on the island. Evidence that the Chinese were seriously contemplating these terms emerged in early September, when a high-ranking Peking diplomat in Washington nervously questioned Holbrooke about newspaper reports that the United States was considering the transfer of sophisticated aircraft to Taiwan. The question prompted the Administration to issue a public denial of these reports, and at the same time (consistent with long-standing policy calling for the supply of only "defensive" weapons to Taiwan) to reject privately a Nationalist request for aircraft that appeared to have significant offensive capabilities.

On September 19, two days after his Camp David triumph, President Carter personally entered into the normalization discussions with the Chinese. Almost euphoric following his Middle East mediation, he invited Ambassador Chai to the Oval Office to stress the need for Chinese concessions. But whatever weight the President's intervention carried, it was not immediately felt. The Chinese were silent for six weeks, presumably debating the U.S. proposals. Finally, on November 4, they responded to Woodcock as he ended his series of "presentations."

During that session, Woodcock gave Huang Hua the draft of a communiqué in which, for the first time, the January 1 target date for normalization was communicated to the Chinese. Huang replied by asking for clarification of several points regarding the future of U.S. links with Taiwan. Among other things, Huang wanted to know what sort of legislation was necessary to retain ties with Taiwan as well as the nature of America's eventual trade and cultural relations with the island. His request encouraged the Washington specialists since it indicated that the Chinese now appreciated the gravity of the Taiwan dimension in the normalization process.

Woodcock provided Huang with answers to his questions, but four weeks went by without direct word from the Chinese, presumably because they were again debating their next move. In the interval, however, Teng Hsiao-ping signaled his willingness to push the process forward in three separate interviews, two with American journalists and one with a Japanese political figure. He made it plain to the Americans that China would not disrupt Taiwan's economic and political system. And speaking to Yoshikatsu Takeiri, chairman of Japan's Komeito Party, he underlined two crucial points. First, he said, normalization could be concluded "in two seconds" if handled as a political rather than legalistic problem. And, second, he looked forward to visiting the United States once normalization was complete. After that, Teng added, he would be ready "to depart and join Karl Marx, wherever he is."

On December 4, Chinese Deputy Foreign Minister Han Nienlung (substituting for Huang Hua, who was ill) summoned Woodcock to a meeting, and showed him a Chinese draft communiqué that agreed on January 1 as the target date for normalization. He also advised Woodcock that Teng Hsiao-ping would see him soon. "At that stage," an Administration official later recalled, "we knew we had it."

The prospect of Teng concluding the deal with Woodcock came as a relief, since it had been anticipated that Vance would have to go to Peking for the final negotiations, and that augured risks of possible failure. But nothing occurred for a week, until, in Washington, Brzezinski prodded Ambassador Chai. On December 12, Teng met with Woodcock and accepted the U.S. proposals: the Chinese would "agree to disagree" on arms sales to Taiwan; and, Teng assured Woodcock privately, there would be no Chinese "contradiction" of a statement by the President voicing his concern for a peaceful solution to the Taiwan problem.

Still, aware of the difficulties caused by ambiguities in the Camp David accords, the President insisted that Woodcock see Teng twice more to make sure that they understood each other, especially on the issue of arms sales to Taiwan. Brzezinski meanwhile went over the point with Chai during the small hours of Friday, December 15, and won his concurrence.

Carter made his announcement that evening, and the Chinese stuck to the agreement. In a Peking news conference, Hua Kuofeng predictably denounced the sale of weapons to Taiwan, but added that the United States and China had agreed to normalize relations despite "differing views." Significantly, too, he refrained from any pledges to "liberate" Taiwan, but referred to the island together with Hong Kong and the Portugese possession of Macao as territories that would ultimately be "reunified" with China.

Under the terms of the understanding, the United States would not immediately abrogate its defense pact with Taiwan, but allow it to lapse in one year in accordance with Article 10 of the treaty. The United States would make no new commitments to furnish military equipment to Taiwan during 1979, but supplies in the pipeline would continue to flow and fresh arms sales could commence again in 1980.

What emerges from this account is that the move to normalize relations was carefully considered and prepared on the U.S. side, over a long period. As the expressed approval of both President Ford and Secretary Kissinger indicates, the acceptance of the basic Chinese terms was all along essential to any possibility of agreement. In the end, the Administration seemed to most objective observers at home and abroad (where normalization was almost universally approved, mostly with enthusiasm) to have got as much assurance on the future of Taiwan as was conceivable. And the timing, while originally put forward by the American side, seems to have been pushed in the end by the Chinese, doubtless partly under the pressure of the Soviet-Vietnamese treaty and partly in the realization that any delay would be likely to raise more serious political problems in America.

Despite expressions of outrage and an anti-American demonstration on Taiwan that unfortunately got out of hand, the Nationalist regime responded to normalization on the whole with moderation. President Chiang Ching-kuo ruled out the possibility of a flirtation with the Soviet Union and rejected the notion of a declaration of Taiwan's independence. Underlying his caution may have been the realization that, while China lacked the military muscle for an invasion, it could shatter the island's successful economy by putting pressure on the nations that recognize Peking to refrain from trading with Taiwan. Barring an unforeseeable crisis, it seemed that Taiwan was secure.

There were signs during the course of the year that Peking may be striving gradually to work out a Chinese-style modus vivendi with Taiwan that would eventually permit the island to enjoy autonomy under China's nominal sovereignty. In August, for instance, Peking reversed its past policy by sending representatives to a conference in Tokyo at which scientists from Taiwan were also present. Similarly, Peking recently raised no objections to a request by Thai International Airways to fly to both China and Taiwan. Reports from Hong Kong indicate, moreover, that a lively if covert trade between China and Taiwan is developing, with goods from the two places being "laundered" as they pass through the British colony. One school of thought suggests that China's aim, for the foreseeable future at least, is the "Hongkongization" of Taiwan, under which Peking would continue to assert its claim to the island as it does to the British colony, but profit from its remarkable prosperity until its status is defined - if it ever is.

It remained to be seen, however, whether President Carter's move would surmount opposition in Congress. The President was supported by such Senators as Edward Kennedy, Alan Cranston and Henry Jackson, but he encountered hostility from outright foes of normalization like Barry Goldwater as well as from others like John Glenn, who felt that Congress should have been consulted in advance - as a sense-of-the-Senate resolution, passed unanimously in July 1978, had urged. The Administration required backing on Capitol Hill for confirmation of an ambassador to Peking and for legislation to retain the U.S. ties with Taiwan, and it was counting on an appreciation in Congress that a refusal to endorse the President's step would mainly hurt Taiwan.


The U.S. relationship with China thus moved during 1978 dramatically in the direction of closer ties. In marked contrast was the normalization of relations between the United States and Vietnam. By early 1979, with Vietnam's takeover of Cambodia, the prospect of U.S. recognition of Hanoi seemed remote.

Carter had declared even before entering office that he intended to recognize the Hanoi regime, and the Administration moved in that direction during 1977. In a series of talks in Paris and New York during that year, Holbrooke advised the Vietnamese that the Administration placed no conditions on recognition, and, as a sign of good will, the President withdrew previous U.S. objections to Hanoi's membership in the United Nations. But the Vietnamese, whose skill at diplomacy is spotty at best, displayed a lack of flexibility by demanding more than three billion dollars in war reparations, contending that they had been promised that sum by President Nixon as well as by the cease-fire agreement signed in Paris in 1973. The demand prompted Congress to put constraints on U.S. dealings with Hanoi, among them a prohibition against any American assistance to Vietnam through international financial institutions. The Administration lobbied successfully to remove that prohibition, but the Vietnam negotiations were derailed again early in the year when the chief Vietnamese envoy to the United Nations was implicated in an espionage case. These complications consumed time that could have worked in Vietnam's favor had its leaders been more supple.

During the first half of 1978, the Vietnamese began to indicate a readiness to drop their demands for reparations and, as a gesture of their changed attitude, they delivered the bodies of 11 American servicemen missing in action since the Vietnam War. The change appeared to be motivated in part by their conflicts with China and Cambodia as well as a desire to dilute their dependence on the Soviet Union.

In the latter half of the year, however, those very conflicts began to affect sharply the American attitude. Hanoi's harsh treatment of its ethnic Chinese minority - which had largely stayed passive throughout the long 30 years of war - precipitated a wave of refugees, whose plight led the Carter Administration to act to admit another 25,000 of these "boat people." Inevitably congressional sentiment, which had shown signs of relenting on the issue of normalization, tended to stiffen.

More important still, as Administration statements at the end of the year explicitly recognized, was the Vietnamese invasion of Cambodia, which moved from border warfare in mid-1978 to an all-out offensive by late December. In April, as the conflict first became clearly visible, Zbigniew Brzezinski in Washington was moved to label it a "proxy war" between the Soviet Union and China. In fact, its roots were home-grown: Vietnamese and Cambodians had been fighting against each other since the days of Angkor, and, as Cambodians of every political tendency admit, Cambodia was saved from total annihilation by Vietnam by the arrival of the French in the nineteenth century. More recently, animosities between the two neighbors were exacerbated when the Cambodian Communist movement, anxious to avoid domination by Hanoi, liquidated its pro-Vietnamese faction. But by the end of the year Moscow's major role in assisting the Vietnamese and allying itself to them had given a color of truth to the label.

The conflict alarmed the Chinese, who for years had sought to limit Vietnamese influence in Southeast Asia, which they considered inimical to their own security. Besides, China and Vietnam had a long history of friction, which has been aggravated within the past decade by other factors. Hanoi's leaders, many of whom had drawn their early inspiration from the French Communist Party, were scornful of Mao Tse-tung's revolutionary innovations, and so they had differed from Peking on ideological grounds. They also regarded Peking's support during the Vietnam War as having been less than total, and they were especially rankled by China's invitation to President Nixon as the war was still being fought. The Chinese, for their part, were annoyed by Hanoi's consistent refusal to side with them in the Sino-Soviet quarrel, and they were further irritated in mid-1978, when Vietnam adhered to COMECON, the East European economic community that functions under Moscow's tutelage.

The tensions rose in early November as the Soviet Union, evidently retaliating against the Sino-Japanese pact, signed its treaty with Vietnam. Peking exploded in wrath. Teng Hsiao-ping, referring to the Vietnamese as the "Cubans of Asia," called the agreement a "military alliance" that "threatens the security of the region." And his decision to come to terms with the United States was, in part at least, his answer.

Yet the Chinese, though supporting Cambodia with at least a trickle of arms sent by sea, was hard put to begin to match what the Soviets were doing on the other side. And the United States, for its part, had to swallow hard on human rights objections to the domestic conduct of the Cambodian regime, to arrive by the end of the year at a public position condemning Vietnam's intervention and linking any future hope of normalization with Hanoi to the course of the developing war situation.


Elsewhere in Southeast Asia, the five member countries of ASEAN - Indonesia, Malaysia, Thailand, the Philippines and Singapore - observed these tensions with mixed feelings of apprehension and satisfaction. Fearful of being drawn into the conflicts between the great Communist powers and their surrogates, they realized as well that the disputes were serving to add cohesion to their group, which after its founding in 1967 had tended until the last two or three years to resemble a debating society rather than a solid organization. Then, under the stimulus of Communist victories in Indochina and worldwide recession - and with encouragement from Japan in particular - ASEAN began to act more vigorously as a group, and concurrently to expect more concrete signs of support from the United States.6

These trends continued during 1978. The ASEAN countries reduced import tariffs and arranged for currency swaps as a safeguard against sudden monetary fluctuations, and they have plans to share energy and improve communications. They have also undertaken a concerted effort to press the industrial nations to reach an accord on a proposed Common Fund to stabilize commodity export prices. The Carter Administration encouraged these moves during the year. Vice President Mondale toured the area, and in August the Administration played host to a conference of the ASEAN foreign ministers in Washington. The U.S. gestures were designed to reassure the association that the American presence in Asia would continue, and that the United States would henceforth deal with its members in regional rather than individual terms.

At the same time, Vietnamese and Chinese leaders traveled through the area during the year, behaving like missionaries as they proselytized for their respective causes. Vietnamese Premier Pham Van Dong promised the Thais late in the summer that Hanoi would not assist the Communist Party of Thailand either "directly or indirectly," and in his talks with Philippine President Ferdinand Marcos, he tactfully sidestepped the contentious issues of American bases and conflicting territorial claims. He also adopted a conciliatory tone as he pledged to edge Vietnam closer to the ASEAN concept of peace and neutrality for Southeast Asia. But the general response to his pitch, while courteous, was noncommittal. Teng Hsiao-ping evoked much the same response not long afterward, even though he went to such extraordinary lengths in his tour of the area as genuflecting to the Crown Prince of Thailand. Thus the countries of Southeast Asia, in the aftermath of the Vietnam War, remain wary of power disputes in the region.

The United States, however, fared better in its negotiations with a former Pacific possession, the Philippines. After more than two years of negotiations, an agreement was reached that assured the "unhampered" use of two American bases in the Archipelago - the Subic Bay Naval Station and Clark Airfield on Luzon.

Administration specialists had originally favored maintenance of the Subic installation and closing Clark Field, which had been used for logistical purposes during the Vietnam War. But soundings indicated that most Asian nations, including China, perceived the bases to be a measure of U.S. interest in the area, and so the decision was reached to maintain both. That decision posed a dual problem - one involving new understandings with the Philippines on such details as jurisdiction over U.S. military personnel, and the other concerning compensation to the government in Manila. The jurisdictional problem, while highly technical, was charged with the kind of nationalistic emotions that are often aroused by the presence of foreign troops. The problem of compensation was equally difficult, since the Carter Administration faced resistance both in Manila and on Capitol Hill.

The Administration had inherited a proposal made by Secretary of State Kissinger in late 1976 to furnish the Philippines with one billion dollars, half in economic assistance and half in military aid, over a five-year period. The program was supposed to appear generous to Manila and modest to Congress, but perceptions were just the opposite. The Philippine government considered the sum to be insufficient, and its hostility to the offer was sharpened by many of the post-colonial passions that have long nagged relations between the United States and its former possessions. Congress, meanwhile, was reluctant to lock itself into a long-term aid commitment, and its attitude was aggravated by the growing belief that the regime of President Marcos, which governs under martial law, is corrupt and disdainful of human rights.

In the agreement announced in late December, American officials finally persuaded Marcos to accept a compromise under which the Administration undertook to seek congressional approval of some $500 million in military and economic aid over a five-year period, the bulk of the military supplies to be purchased. In exchange, the bases would come more clearly under Philippine sovereignty until the expiration of their tenure in 1991. Thus Marcos agreed to a substantially smaller package than had been offered by the previous Administration - partly because he realized that the earlier proposal would not be approved by Congress and also because other Southeast Asian leaders advised him of their desire to see the U.S. bases remain.


To a large extent, the Administration's concern about the Philippine negotiations represented a lesson learned from its initial fumbling regarding Korea. During his election campaign, President Carter pledged to withdraw all U.S. ground combat forces from South Korea by the early 1980s, and he held to that timetable during his early months in office. But his promise caused grave doubts, even among senior members of his Administration, for three principal reasons. First, he had not consulted the South Korean government beforehand, nor had he discussed the question with Japan, which views the Korean Peninsula as vital to its security. Second, he failed to take into account the impact that disengagement would have on other Asian nations, China among them, which were worried by the possibility of a U.S. retreat from the area in the wake of Vietnam. And finally, he had not adequately lobbied on Capitol Hill for approval to transfer some $800 million in American military equipment to the South Korean armed forces, and the prospect was that Congress, divided between those opposed to withdrawal and those determined to penalize the Park Chung Hee government for the "Koreagate" scandal and its violations of human rights, would reject the plan.

On the advice of his aides, however, the President backtracked. Instead of pulling six thousand men out of South Korea, as originally contemplated, he removed about half that number during the year, and he announced that the last two brigades of the U.S. Second Division, the main American combat unit in the country, would remain until near the end of the withdrawal period. He arranged to make some $275 million in military sales credits available to South Korea in the 1979 fiscal year, with comparable credits to follow for several subsequent years, and to reinforce the U.S. tactical fighter wing scheduled to stay in the country after the withdrawal. These moves, combined with the President's personal intervention, persuaded Congress to endorse the equipment transfer project. And to add credibility to the withdrawal program, the largest joint military exercise since the Korean War was conducted in March 1978, which demonstrated America's capacity to deploy powerful air and sea forces rapidly from the United States and its Pacific bases to the Korean area.

But while the President's reversal reassured Asians, members of Congress and a segment of U.S. public opinion, his back-and-forth motion raised doubts about his consistency. The episode also served as a reminder of the tragic consequences that stemmed from an earlier error in policy toward the same region - the Truman Administration's decision to exclude the Korean Peninsula from the U.S. defense perimeter, which prompted the Soviet Union to encourage its North Korean client to invade the South and ignite a conflagration whose repercussions were felt in Asia for a generation.


The Japanese, who had been especially upset by President Carter's intention to withdraw U.S. ground forces from South Korea, regained their composure after he revised his plan. And they were heartened by his repeated assertions that the relationship with Japan is the "cornerstone" of America's policy in Asia. The relationship has been helped, moreover, by China's vocal support for the U.S. Mutual Defense Treaty with Japan, which has undermined the Japanese Socialists and Communists who oppose the pact and thus bolstered the Liberal Democratic Party, which is committed to a strong security link with the United States.

But if the United States and Japan have overcome many of the diplomatic differences that have divided them in recent years, their trade conflict has degenerated into what one prominent American official calls a "nightmare." By the end of the year, some high-ranking White House advisers were expressing the fear that the trade dispute might begin to erode U.S. political ties with Japan, and memories were evoked of 1960, when President Eisenhower's visit to Tokyo was cancelled because of anti-American demonstrations. The Administration's objective, therefore, has been to insulate the security alliance from the trade quarrel, and so far it has been successful.

Despite the Strauss-Ushiba agreement reached early in 1978 to increase the access of American goods to the Japanese market, the U.S. trade deficit with Japan ran to some $13 billion during the year, and the prospects for improvement seem remote. Much has been written about the problem, but two of its aspects merit emphasis because they underline the extreme difficulties involved in finding a solution. One is the domestic political pressure confronting the Japanese government, which inhibits its attempts to liberalize its import regulations, especially on agricultural products. The other is the changing pattern of Japan's trade, which is working against the United States and other Western industrialized nations.

The Liberal Democratic Party, whose popularity has been declining steadily, owes its survival in office mainly to the fact that the rural vote on which it relies is disproportionately important due to gerrymandered electoral districts. The movement of a large percentage of Japan's rural population to the cities during the postwar industrial boom should logically have weakened the Liberal Democrats, who depend on conservative constituencies in the countryside, but they retained their strength under a system of representation that gives rural voters extraordinary influence. Thus the Liberal Democrats cannot afford to alienate the farmers, whose power to sway import policies has also been built up as a consequence of Japanese agricultural strategies.

In an effort to curb Japan's annual rice surplus and reduce expensive price supports, the Liberal Democrats urged farmers to switch to breeding livestock and cultivating citrus fruit. But fruit production has been so successful that Japan now has a citrus surplus, and Japanese growers have put pressure on the Liberal Democrats to protect them against U.S. imports. Meanwhile, similar pressures are being exerted on the Carter Administration by citrus states like California, Florida and Texas, which are demanding that Japan be opened to their products. The same kind of controversy has been raging over beef.7 The United States and Japan reached an agreement in December, but it would only increase American agricultural exports by some $200 million per year, enough to tilt the trade balance only fractionally. So the commercial dispute between the United States and Japan appears to be far from a solution.8

Japan is meanwhile reducing its percentage of U.S. and West European imports because, in a shift of its trade pattern, it is buying more merchandise from South Korea, Taiwan, Hong Kong and Singapore, or "developing Asia." The share of consumer durables sold to Japan by these countries rose from some five percent in the late 1960s to more than 20 percent in the mid-1970s, while U.S. and other Western exports to Japan fell by roughly the same proportion during the period. Japan is reluctant to erect trade barriers against its Asian neighbors, since it has ambitions to play a more vigorous political role in the region.

The obvious danger to the relationship between the United States and Japan could come from rising protectionist sentiment already visible in Congress. It may not be too farfetched to imagine U.S. retaliation against Japanese products leading to a slowdown of Japan's export industries, with increased unemployment in Japan sparking hostility against the United States. Both American and Japanese officials are aware of this threat, but despite intense negotiations, an understanding appears to be remote. The trade quarrel with Japan, however, illustrates the extent to which the nature of the U.S. involvement in Asia has changed from its former focus on security.


There are other potential problems in the area, several of which affect America's future relationship with the region.

Given China's episodic record since the Communists took over a generation ago, there is no guarantee that the leadership group now in control in Peking will remain united in their pursuit of prudent policies. To a certain extent, then, China must be considered an unpredictable factor in the Asian equation.

Vietnam's hold over Cambodia ought to be a source of concern, since it could exacerbate tensions between the Soviet Union and China. This would have a destabilizing effect on Asia, and, in particular, confront the United States with unattractive choices.

Though relatively placid now, the partitioned Korean Peninsula has been a chronic cockpit of tensions. President Carter's decision to scale down the U.S. troop presence there, combined with the impact of the so-called Koreagate scandals on Congress, has provoked doubts about America's intentions toward that area. As a result, the Administration will have to proceed cautiously in Korea in order to avoid jarring the Japanese and other Asians.

The economic contrasts that separate the industrial nations from the developing countries are vivid in East Asia, where a land like Indonesia is plagued by a population explosion compounded by food shortages. Problems of this kind challenge the West, and especially the United States, because of their potential for disrupting the area.

On the whole, however, the American position in East Asia is healthier today than it has been in nearly half a century. The United States is neither waging a conflict nor supporting an ally militarily engaged in the region, and the power tilt that has aligned its strategic interests with those of China and Japan offers an effective antidote to Soviet ambitions in the area. The focus on security as the key element in U.S. policy has therefore been superseded by other concerns, such as trade, technology transfer, economic development and the quest for social equity. These concerns will require strategies that are in many ways more complex and frustrating than the deployment of troops and targeting aircraft.

But the complications of peace are preferable to the ravages of war. And it may be that 1978 will go down in the history of East Asia as a year in which most of its people, many of whom have known decades of devastation and turmoil, looked toward the future with increasing confidence and optimism.


1 In an ironic twist of history, the Chinese have entered into a Hong Kong real estate project with the firm of Jardine Matheson, the heirs of the Scottish opium smugglers whose activities triggered the Opium War and the opening of China to Western imperialism in the nineteenth century.

3 See, for example, Theodore H. White's dramatic account of the 1944-45 period in his memoir, In Search of History, New York: Harper, 1978, chapters 5 and 6.

4 See Robert G. Sutter, China-Watch: Toward Sino-American Reconciliation, Baltimore: Johns Hopkins Press, 1978, p. 56.

5 The New York Times, July 25, 1978

7 An example of the sensitivities involved in this controversy emerged recently, when U.S. meat packers found a loophole in the Japanese quota through which they could export a cut of beef stomach known as traversus abdomena, which can be made to resemble a steak. The Japanese government detected the loophole and plugged it, and the trade it represents is neglible, but the traversus abdomena issue has been engaging the energies of senior officials in Washington and Tokyo.

8 See James C. Abegglen and Thomas M. Hout, "Facing Up to the Trade Gap with Japan," Foreign Affairs, Fall 1978.

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  • Stanley Karnow is a syndicated columnist, having been a longtime correspondent in East Asia for several publications. He is the author of Mao and China: From Revolution to Revolution.
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