FOB TKE ASSISTANT DIRECTOR FOR REPORTS AND ESTIMATES
PROBABLE DEVELOPMENTS IN TAIWAN
his copy of this publication Is for the Information and use of the recipient designated on the front cover and of Individuals under the Jurisdiction of the recipient's office who require the Information for the performance of their official duties. Further dissemination elsewhere In the department to other offices which require thefor the performance of official duties may be authorized by the following:
a. Special Assistant to the Secretary of State for Research and Intelligence, for the Department of State
Director of Intelligence, OS, USA, for the Department of the Army
Naval Intelligence, for the Department of the Navy
of Intelligence, USAF, for the Department or the Air Force
of Security and Intelligence, AEC. for thc Atomic Energy
eputy Director for Intelligence, Joint staff, for the Joint Staff
g. Assistant Director for Collection and Dissemination, CIA, for any other Department or Agency
his copy may be either retained or destroyed by burning In accordance with applicable security regulations, or returned to the Central Intelligence Agency by arrangement with thc Office of Collection and Dissemination, CIA.
DISTRIBUTION: Office of the President National Security Council NaUonal Security Resources Board Department of Stale Office of Secretary of Defease Department of Uie Army Department of the Nary DepArtmcnl of Uie Air Korce Joint Chiefs of Staff Atomic Bnrrey Commluton Research and Development Board
PROBABLE DEVELOPMENTS IN TAIWAN
Chinese NaUonallst regime on Taiwan will effect political and military adjustments
This paper, originally preparedpecific request,eappraisal of the survivalof theaUonallst regime on Taiwan In thc light of US policy announcements that tbe US will not support Taiwan beyond the economic aid already given. This apeetQe estimate baa been made within the broader framework of tbereadied tn; "Taiwan remains tbe one non-Communist area of China where positive US military acUon could be effective In preventing Chinese Communist control and thereby directly serve Important U3 strategic Interests. Without major armed Intervention. US pollUcal. economic, and logistic support of the present NaUonallst Island regime cannot Insure Its indefinite survival asanoa-Communlst base. Communlit capablllUea an such that only extended US military occupation andof Taiwan can prevent Its eventual capture and subjugation by Chinese Communist forces, Foiling US military occupation and control, aregime on Taiwan probably will succumb to the Chinese Communist* by the end of
suniciently realistic to make possible adefense of Taiwanombination of Internal and external threats. Thc basic economic situation on Taiwan ls not ofource of serious dissatisfaction, but visible and latent disaffection among both theand Chinese, arisingariety of other causes. Is apparent Such disaffectionerious weakness in Itself andreat potentiality for widespread Communist subversion. Limited military defections are known to be occurring. Substantial defections en bloc are to be expected In the event of an external attack. Considering theseof the Nationalist position on Taiwan and the military potentiality of the Chinese Communists, the latter are estimated tothe capability for carrying out theirexpressed intention ofnd will probably do sothe period of June-December.
PROBABLE DEVELOPMENTS IN TAIWAN
Taiwan, restored to the Chinese In IMSalf-century of Japanese rule, lias been administeredhinese Nationalistsince' It is now also the seat of the refugee National Government of China, which was transferred to the islandchwanlthough Chiang Kai-shek had been preparinginal Nationalist refuge for moreear, the transfer of thc "provisional capital" to 'Taipei. China" has broughtremnants of Nationalist political and military units to Taiwan and places upon the defenders of that Island virtually, the whole burden of continued Nationalist resistance to the Chinese Communists.
The position of the NaUonal Government on Taiwan so far as control of the Taiwanese Is concerned Is relatively strong. Because of strong forces of disintegration now at work within the government and militaryhowever, an Invasion could betouick collapse.
The presence of Uie refugee NaUonalof China on Taiwan probably will augment the disunity, inefficiency, defeatism, and other weaknesses which have spelled dls-
' Legally. Taiwan Is not now regardedart of China. However, wtui the saneUon o( Uie principalaiwan has been under Chinese Nationalist admlnlitraUoa alnce October IMS. In accord with Uie Cairo Declarationn which the US, tbc UK. and China announced thatFormosa, and the Pescadores shall be re stored to the Republic ofhe three power* reaffirmed the Cairo DcclaraUon In the Potsdam Proclamation ofhich the USSR sub-fquenUy endorsed. Neither the US nor any other power, however, has formally recognized the au nexaUon of Taiwan by China although thc US has admitted and acquiesced in China's de factoand the island's legallike that of other Japanese-occupied territories in which the US and oiher participant* in the war with Japan have anto be determined Inon or the Japanese peace treaty.
aster for the Nationalists on the mainland. NaUonal 1st political control over thehowever, which has been dependent for Uie most part on Uie presence of Nationalist garrison forces there, has been greaUySince the Communist crossing of theany additional Nationalist Army units, as well as UieNavy and Air Force, have beenon Uie Island. The considerable weight of Nationalist armed forces on Taiwan assures Uie continuation of firm Nationalist political control and the maintenance ofinternal security so long as factors making for disruption do not combine andconsiderably In strength.
ajor obstacle In Uie path of Nationalist efforts toward stability onhas been demonstrated recently byover such Issues as reform, defenseand attempted shifts in Uieof military and political power. This factionalism, which Is acute In both military and poliUcal circles, probably will be concealed In Uie immediate future In order tonited Nationalist front for thc solicitation of US aid.
The political maneuvering of Chiang Kai-shek to perpetuate his personal control over the remaining NaUonal Government and Kuomiotang machinery has contributed greaUy to disunity. Tlie struggle for power between Uie "old guard" In Uie Kuomlntang and Uie more moderate elements probably will be intensified as ChianglcUon of reform without upsetting Uie balance among Uie adherents upon whom his personal power depends. As affairs in Taiwanto degenerate, existing factionalism can be expected to assume open forms.
Various reports during recent months, for example, have indicated thaten, Uie USeducated general charged with Taiwan's defense, has beentat aimed at thc preservation of Chiang as a
and thc simultaneous liquidation of most of Chiang's close associates. Aof factors militate against the probability of such an attempt at present. Rumors of the contemplated more have been widelyand are known to Chiang'sAlso, Sun's political Inexperience and bis lack of influence with Important political and military leaders suggest his probableto undertakeevolt. Finally, Sun would be unlikely tooup In any case, without tangible assurance ot US support.
The appointment of K. C. Wu, former mayor of Shanghai, as Provincial Governor ofadvertised as evidence ofreform of thc provincial administration under civilianexpected neither to lead to reforms nor to keep down theconflict between the provincial and thegovernments. Regardless of Wu'sability and experience, he Is seriously hampered by the opposition of the former Governor, old-line generals, andleaders, all of whom are wellln tne national and provincial governments. Wu has found that hisIs limited to civilian affairs on thelevel, and he Is also restricted by the presence In Taiwan of the Nationalistand the ruling KMT cliques.
Within even this limited field of authority. Governor Wu ls further restricted by theof Chiang Kai-shek. Chiang'sof thc National Government and Party machinery, now reduced to its most loyal core, ls still strong; moreover, Chiang will notrelinquish his active role as leader of the Nationalists. In addition, Wuong record of loyalty to Chiang, for whom he has been an ardent apologist. It ls improbable, therefore, that Wu will be able to actof Chiang In any matter of
2. Economic Situation.
Despite the Increase In the island'sduring the past year, Taiwanood surplus and will continue to have so long as fertilizer Imports continue. Industrialsince VJ-Day has been substantial. If
the government Is to realize the full benefits of agricultural and industrial recovery, however, favorable foreign trade relations andtrading institutions will have to be
The Nationalist fiscal situation Isand eventually the continuing budgetary deficits are expected to wipe out thcholdings In specie and foreignDespite this fact. Nationalistresources probably are adequate tocontinued operationsnd thc basic economic situation In Taiwanno Immediate threat to internal security,'
3. Military Situation.
a. Strength, Composition, and Disposition of Nationalist Forces.
The present military strength reported to be under the control of the Taiwanfre0 Air Force,0 Navyf the Army'sohousand men per division),one-half ore located ln the Chou-shan Islands and on Quemoy Island. Theincludingorce Personnelroops of the Artillery Command, are located on Taiwan and the Pescadores.
Thc Nationalist Navy hasombat vessels in operationeployed between Shanghai and Foochow) andessels under repair. All naval operations are based onThc largest units are former Japanese destroyers. In addition to thesehips, the Nationalistsomparatively largeof auxiliary vessels and smaller craftfor patrol operations.
The Nationalist Air Force is composed of two Light Bomber Groups, four Fighter Groups, two Transport Groups, and one Photo-reconnaissance Squadron. All Air Force units are based on Taiwan. An0 percent serviceability rate, are assigned to tacticalew fighter and bomber aircraft are rotated for operations from an advance base In the Cbou-shan archi-
detailed statement or the current economic siluntion on Taiwan Is set forth in the Appendix.
pelago, and special operations are conducted from other remaining Nationalist bases near Arooy and on Hainan Island.
ationalist Military Capabilities and Limitations.
In the present Chinese Nationalist military organization no provision Is made for Inrvice coordination below the level of the Generalissimo. Chiang Jealously guards his control over subordinates, even those of lesser rank, by playing one against another Infor his personal favor. Coordination can be obtained only through Chiang whose post record ls one of politically motivated meddling In tactical operations. Theof achieving an effective coordinatedamong Nationalist armed forces through the supervisory direction of Chiang himselfunrealizable. With or without Chiang, such coordination cannot be realized so long as politics plays Its traditionally dominant role In Chinese military organization.
Individually. Uie troops commanded by Uie Chinese Nationalist regime on Taiwan are good raw material. The resources available to Uie Nationalist regime (which Includestocks of Individual arms, automatic weapons, light artillery, ammunition, other materiel, some arsenal capacity, andreserves) are potentially adequate to equip and to maintain these troops both for foreseeable Internal security requirements andajor defensive operation. Actually, however. Nationalist troops and units arcequipped, trained, and led. Needed materiel Is held in disorganized depots and dumps, and there is no system for Uie control and distribution of supplies.
Thc Nationalist officer corps is professionally inept. Advancement is by favor rather than by merit, and loyalties tend to be personal rather than organizational or national.
Factional splits In Uie Nationalist highpreclude proper exercise of leadership In any of the services. The pattern of divided responsibility and overlapping authority, for example, has blocked thc efforts of General Sunby some US observers to be thc most capable Nationalist Army of-
ficerrofessionalbasic unit training programs andbolster Taiwan's military defenses. While nominally the paramount commander of Uie island's ground defenses. Sun does not control all Taiwan's troops, ls denied adequateand ts disliked and distrusted by Uie generals of the Whampoa clique who enjoy Generalissimo Chiang's confidence.
There are Indications of Chinese Communist efforts to infiltrate and to dlssJTect Nationalist forces on Taiwan, and the chances are that these efforts will eventually succeed. The Nationalist Army Is ripe for Communistand subversion. Successive defeats on the mainland have lessened the Nationalist will to fight, and disaffection can be expected to appearajority of the Nationalist troops when confronted with Uie threat of attack. Military unit defections win occur whon, but not unUI, tho military leaders deem such action expedient.
So far as numbers of ships and personnel are concerned, Uie Nationalist Navy Isadequateefense of Taiwanajor Chinese Communist amphibiousFuel requirements could be satisfied In an emergency; factional strife, which exists between Uie old Navy clique and theIn Chief, an ex-Army man, does not constitute an insoluble problem. Forsuccessommunist assault, however, Uie NaUonallst Navy will have toon four factors, all of which are
maintenance of vessels;
Adequate planning and performance of operations;
Coordination of efforts with ground and air forces, especially In Uie matter ofwiUi air reconnaissance and support;
loyalty and willingness to
NaUonallst vessels now on patrol stand in need of many minor repairs. If currentare continued, these minorwill become serious problems wilhin six months, at which time thc greater part of the Nationalist Navy will be immobilized.
Nationalist Air Force operations areupon foreign sources ot logistic support, andegree upon those Individuals in the Air Force who received US training.facilities ore limited and the spare ports shortage, partially the result of an Inadequate supply system, has led to the common practice of aircraft cannlballzatlon. Althoughaircraft reserves are now limited toand Mosquito (light bomber) aircraft, the recent receipt of1 aircraft has Improved the Immediate fighter capabilities of the CNAF.s have also beento the Notionalists sinceuel on hand ls estimated to be adequate for SVi months' operations at the current rate of expenditure, and air facilities on Taiwan are adequate for operations.
Air Force operations during the majoradvances on the Chinese mainland were generally ineffective. Althoughln maintenance and supply wereIn large part to administrative lneplness and poor tactical techniques,unsatisfactory pilot and crewweak command structureack of mteMcrvice cooperation were equallyMost Important of all was tho lack of will to fight.
Sincehen the Air Forceto Taiwan was completed, theAir Force has shown Improvement Inagainst transport and Industrialmostly ln the Shanghai-Nanking area, and against other targets In tlic "blockade" of Shanghai and the defense of the Chou-shan Islands. As to thet Is probable that the threat of air action rather than any outstanding record of actual Interceptions has been the principal contribution of the Air Force. While reports on effective airin the defense of the Chou-shan Islandsotential for local cooperation, tho problems of cooperation Involved In adefense of Taiwan would not beeither In thc degree or continuity of Inter-service cooperation required.
The Air Force, under the leadershipon-dying ex-Army officer, reports directly to Oeneralissimo Chiang, but thc two deputy
commanders also enjoy the personal favor of Chiang.esult, in the event ofwithin the Air Force high command, contradictory orders reportedly are oftenby the commanding General and hisdeputy, as coming directly from Gen-erahssimo Chiang.
Post defections in the Air Force, though not large-scale. Indicate successful Communistof low morale among some CNAF personnel. The present limitation of missions to those flight personnel whose families are resident In Taiwan Indicates continued Air Force concern over thc prevention of further defections. During the past six months,tbe morale of the flying crews is reported to have Improved.
The operational air strength consistsighters,ight bombers,econnaissance planes,ransports. Current National Air Force capabilitiesommunist assault on Taiwan are considered good. It Is estimated that with the present stocks of fuel and ammunition, and current aircraftthe Air Force Is capable of0 sorties with combat aircraftorties with transport aircraft. At therate of operations, this total capability will be heavily dissipated by
4. Communist Intentions ood Capabilities with Respect to Taiwan.
The Chinese Communist intention to gain control over Taiwan was announcedhen the Communists designated the Island as one of sixteen key areasto be "liberated" from Nationalist rule, and the intention to take the Island0 has been strongly reiterated. The mission has been assigned to the Commander of the East China field forces. Communist propaganda has emphasized Taiwan's Involuntary role as Chiang Kai-shek's last fortress and hasthat Communist forces must occupy the island, both to end the Nationalist blockade of mainland ports and to destroy the last vestige of Chiang's regime. This propaganda has also exploited thc theme of USdesigns on Taiwan and has expressedlest action by some outside power or
of powers interfere with the Communist occupation and administration of the Island, b. Capabilities.
nfiltration and Subversion.
Although the progress of CommunistIn Taiwan cannot be estimated with precision, lt ls believed to be at present still hi the early stages among the military and civilian population. Although the Taiwanese themselves are aaU-Communlst, their dislike for the Nationalists, together with theirImmaturity, renders them susceptible to Communist propaganda.
Communist penetration of Taiwan probably will Increase as Uie Communist militaryprogress. Low morale alreadyIn -many Nationalist naval, air, and ground units. Nearly all Uie Chinese have home and families In mainland China, and thereenerally hopeless outlook for long-terra Nationalist resistance. Moreover, thc Chinese populaUon In Taiwan, military and civil, may perceive possible advantages to be derived from accommodation with theFor these reasons, Uie ChineseIs considered to be generally vulnerable to Communist Infiltration and subversion, likewise, many Taiwanese may decide toIn Uie overthrow of Uie Nationalists, in the desperate hope of an Improved lot under the Communists.
(a) Strength, Composition, and Disposition of Communist Forces.
Tlie Army represents almost the entire Chinese Communist military strength. For pin poses of this discussion. Communist army forces of concern are those of the East China Field Forces, largely infantry troops,by light artillery, roughly grouped in two sub-areas:
In addition, Communist military manpower reserves are sufficient to allow any necessary rcen/orcement of these forces.
The Chinese Communist Navy, made up of units and personnel defected from thoNavy, possesses or can obtain three operational destroyerand big craft of various types, numerous barges and tugs, as well asx-UNRRA fishing trawlers, most of which are suitable only for water-lift. Prospects for expansion are dependenturther NaUonallst defectionsof the light cruiser Chungking which, although damaged by NaUonallst air attack at Hulutao. may have been refloated and may now be undergoing repairs at Dairen. There ls also Uie possibility of direct Soviet naval assistance, overt or covert.
The Chinese Communist Air Force is anfactor. Although the CCAF has not been observed in tacUcal operations, reports of training activity In Manchuria sinceationalist defections of aircraft, pilots, and technicians, and the possibility of Soviet advisory and logistical assistance all lead to Uie conclusion that Uie Chinese Communists have at least an air force which mightone shot" threat against Taiwan in actual, limited support of an amphibious operation.he case of the Navy, Uie Communist Air Force might be bolstered by further NaUonallst defections or by moreSoviet support.
(b) Capabilities and Limitations of Com-munist Forces.
Troop dispositions of the ChineseEast China Field Forcesand force adequate In number and fighting quality to overcome the Nationalist Army Forces on Taiwan once landings in force have been made. Weapons and ammunition do notany particular problem for theMoreover, they have availablepowered landing-craft to transport at0 troopsingle lift. These means for transport can be augmented bynaUve craft If needed and somelanding-craft may be purchased from abroad.
The most apparent Communist militaryarc deficiencies In supportbig air and naval forces necessary for escort of anoperation. However, in view of the
Nationalist weaknesses, thesedeficiencies are more apparent than real. Basically, Taiwan's defenses areby the factors of disunity and ineptness and by tendencies toward defection. Inthc defense of Quemoy and Chou-shan Islands has weakened and Is furtherthc military strength on Taiwan andIs providing the Nationalistsalse sense of security. The Communists can furthermore so exploit their capabilities for subversion, infiltration, and sabotage onas to cause key Nationalist miliiaryand otherwise neutralize Importantdefensesritical tunc. It Isthat progress of Communistto bringationalist collapse by
these means will be strongly In ovldence before that critical time arrives.
In an operation against Taiwan, thewill select the optimum timingwith political considerations andmilitary capabilitiesroduct of their own growing capabilitiesaningmilitaryhis optimum period will probably extend from Junether factors such asSoviet assistance or pressures growing out of current Nationalist military operations might cause an advance ln thetimetable. Meteorologicalwould indicate an operation either just before or after the June-September typhoon season.
APPENDIX THE ECONOMIC SITUATION
9 harvests eliminateood shortage will threaten the National Government. The rice crop9 is estimatedillion tons, approximately the same as' With Increased acreage, rice production0 is expected to exceed thatweet potatoes, the other basic foodstuff of tlic Island, will also be ln ample supply. Moreover, current Taiwanese food surpluses are not being drained off to thca fact that Improves the Island's foreign trading position.
Continued agricultural surpluses arehowever, on the availability ofand ECA has been supplying anproportion of Taiwan's fertilizerAlthough local fertilizerla Increasing. It Is Insufficient to meet these requirements, and Taiwan's futureprosperity will demand continued sup-piles of foreign fertilizer.
While recent reports indicate someln Chinese administration, particularly in regard to9 land reform program,onsequent lessening of the burden on the farm population, the National Government of China Is faced with the necessity of Imposing heavy rice requisitions on thc farmers to feed thc army and civilian additions to the Island's population.
2. Industry ond Foreign Trade.
Despite evidences of Nationalistindustrial production, which Is almostovernment responsibility inhasubstantial recovery since
"The irice harvest provided an exportableofons, most of which was smuggled to the mainland. Although the Island'* population has Increased during the past year,6 crop winurplus over domestic food requirements.
VJ-Day. All Industries, Including sugar, coal salt, cement, electric power, and fertilizer, are producing In larger quantities now than they were in the years immediately after thesurrender. Although over-all production Is still below wartime records, some Industries have exceeded prewar levels and the output of fertilizers exceeds even wartime levels.
Industrial output, like agriculturalwill probably be maintained or Increased In the coming year. If Taiwan does notheater of war. For the present, Taiwan has adequate domestic resources. Exportableol sugar as well as other Items like tea, coal, fruits, andwith ECAprovide the means for importing such essential supplies as fertilizers, rawtextiles, petroleum, and machinery.
Foreign trade, however,argeof the Taiwanese economy, and theof this economy will depend upon the establishment of favorable foreign tradeand of efficient trading institutions. Until thistart in this direction has beenbenefits to the Nationalist regime resulting from the physical recovery of agricultural andoutput must be regarded as largelyrather than realized.
Thc most unfavorable aspect of thesituation on Taiwan ls the Nationalists' financial plight The Island, with aof about seven million,imitedfor tax revenues. In order to support the Increased civil staff transferred from the mainland, as well as the island's heavyestablishment, the national andgovernments are necessarily Incurring deficits. To meet these deficits, theare dipping Into their specie and foreign exchange reserves. Reports from the US Fed-
Hcserve System on official Chinese dollar holdings In the US, together with less reliable information on the size of Generalissimo Chiang's gold hoard In Taiwan, Indicate that the Nationalists may have had as much0 million In specie and foreign exchangeat the beginningith these financial resources, thc Nationalist regime can
probably continue through the current year. Ultimately, however, these reserves will beThe financial solvency of theGovernment of China will thus be threatened and. in the event that Nationalist armies are engaged in effective resistancerolonged period, additional foreignassistance may be required.
DISSENT BY THE INTELLIGENCE DIVISION, DEPARTMENT OF THE ARMY
Intelligence Division of the Department of the Arm; dissents for the following reasons:
The study overemphasizes andtbe extent of internal disaffection and subversion In Taiwan. Field Intelligence of the past six months Indicates an improvement of morale among military forces in Taiwan, as well as Increased effectiveness ofactivities on the Island.
The treatment of the poliUcal andsecUons of Uie study appear to beinconsistent, particularly for an esti-
mate of an Asiatic area. The formerather dismal situation, whereas In UieUie situation ls described as fairly stable. Since the economic capability of Uie Island is not given sufficient recognlUon in Uie political analysis of the subject, it ls felt that Uie nega-tivc aspects of the political situation are over-stressed,
he estimate does not take into account thc current and possibly continuing adverse conditions on thc mainland which mightUie Communist timetable for an invasion attempt of Taiwan.
ISSENT OF THE OFFICE OF NAVAL INTELLIGENCE
Office of Naval Intelligence dissents from0 because certain factorsNationalist and Communist capabilities In the estimate are overemphasized, while other factors are misinterpreted. Since the factors are overemphasized and misinterpreted in fa-
vor of the Chinese Communist capabilities the conclusions as drawn are considered to beand the Chinese NaUonallst capablli-Ues to resist an Invasion of Taiwan are
DISSENT BY THE DIRECTOR OF INTELLIGENCE, UNITED STATES AIR FORCE
Director of Intelligence. United States Air Force, dissents for the following reason:
The Chinese Communist capability ofTaiwan Is dependent primarily on theof outside assistance they can obtain In
building up the air and naval strengthstoarge scale amphibious operation. It ls estimated that thc lack of naval and air power will delay the Communist assault against Taiwan until0 or