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firmed the PRC position that the way of reunifying the country is "entirely China's internal affair.” It did not contradict the U.S. stand on a peaceful settlement of the Taiwan question. (Texts of the communique and statements are attached.)

The United States also stated that it is terminating the Mutual Defense Treaty in accordance with its provisions; the United States is not abrogating the treaty. On January 1, 1979, the United States will give Taiwan 1 year notice of intent to terminate.

In the course of negotiations on normalization the United States repeatedly emphasized its concern for the well being of the people of Taiwan, and it made clear its intention to continue the sale of defensive weapons to Taiwan on a restrained basis after termination of the defense treaty. Premier Hua Kuo-feng, in his press conference on December 16, made the following statement on the subject: "The United States side mentioned that it would continue to sell arms to Taiwan for defense purposes after the normalization. We can abso lutely not agree to this. During the discussions, we made our position clearly on many occasions. On this question, continued sale of arms to Taiwan after normalization does not conform to the principles of normalization, is detrimental to a peaceful settlement of the Taiwan question and will exercise unfavorable influence on peace and stability in the Asia-Pacific region and the rest of the world. The two sides had differing views, but nevertheless, the joint communique was reached.”

Under the terms of the Communique formal diplomatic relations between the United States and the People's Republic of China will be established on January 1, 1979, and diplomatic relations with the Republic of China will be terminated. On March 1, 1979, the United States and the People's Republic of China will establish embassies in each other's capitals and exchange Ambassadors.

Remaining U.S. military personnel in Taiwan-down to about 700 noncombat personnel from the 10,000 there when the Shanghai Communique was issued—will be removed from the island before the end of April. The whole process of readjusting our relations with Taiwan can be completed by the end of 1979. Vice Premier Teng Hsiao-p'ing will visit Washington on January 29.

FUTURE RELATIONS WITH TAIWAN

U.S. interest in the peaceful resolution of the Taiwan question was a key element of the U.S. statement in the Shanghai Communique of February 1972. It has remained at the heart of the U.S. position.

President Carter emphasized in his statement of December 15 that he has paid special attention to insuring that normalization of relations between the United States and the People's Republic of China will not jeopardize the well-being of the people of Taiwan. This was a point he made at the outset of his administration and which has been central to the negotiations ever since. The fact that normalization has taken so long to achieve attests to the difficulty of reconciling this concern with Peking's view that resolution of the Taiwan question is an internal Chinese matter. Security.-An important component of Taiwan's security has been ability to maintain modern military forces and to have adequate

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armaments for its self-defense. Over the years, the United States has given Taiwan access to carefully chosen defensive military equipment. The United States will continue this policy after the termination of the defense treaty.

China has compelling reasons not to seek a military settlement of the Taiwan issue. China's self-interest lies in constructive relations with the United States, Japan and other nations of the world. The PRC has a major stake in avoiding actions that would put those relationships at grave risk, particularly as it devotes its primary attention to modernization. Furthermore China has major concerns for military threat elsewhere.

The PRC does not have—and for the foreseeable future will not have—the military capability of taking Taiwan by force. Although Peking has enormous land forces and a large air force, their technological level is low. It also has a 4,500 mile border with the Soviet Union along which the U.S.S.R. has deployed 44 divisions, plus air and other support units. Facing Taiwan, Peking has about 900 aircraft-mostly MIG 15, 17 and 19's.

These air units are short range, and Peking has yet to deploy airto-air missiles for their use. The PRC navy is mostly a coastal defense force, although it does have a submarine warfare capability. The PRC does not have an amphibious attack capability, nor are there signs it is trying to develop one. Since 1949 the PRC has built only one LST.

Taiwan's armed forces are much smaller (it has only 1/50th the poulation of the mainland), but they are far more modern and are deployed in strong defensive positions. The Army has about 335,000 men, the Air Force 75,000 and the Navy 70,000. The air defense capability rests upon a mixture of surface-to-air missile battalions (Improved Hawk and Nike-Hercules), and an interceptor fleet of 300 aircraft (F100's, F-104's and F-5E's). These latter are fitted with late model air-to-air missiles (AIM 9-J) and as weapons systems are far more modern than anything the PRC can deploy. Taiwan has recontly installed the Hughes Semi-Automated Air Defense radar system, augmented by mobile radars for extra insurance against surprise attack. It's command-and-control system is far more advanced than the PRC's, as are its electronic counter-measures and counter counter-measure capabilities.

Economic prospects.—The economy of Taiwan is sound. Foreign exchange reserves amount to almost $7 billion and its people enjoy the third highest per capita GNP in Asia. Taiwan's total foreign trade is forecast at about $23.3 billion for 1978 of which the United States will have roughly one third or $7.3 billion. A number of major U.S. oorporations presently do business in Taiwan, and are expected to continue to do so. These include such major banks as Bank of America. Chase Manhattan Bank, Citicorp, and American Express; major U.S. industrial firms include Ford, RCA, Union Carbide, Zenith and Corning Glass. There is every reason to believe U.S. economic ties to Taiwan will continue to grow. For example, Japan's trade with Taiwan grew over 233 percent since they normalized relations with the PRC; Australia's grew by 370 percent; and Canada's by 539 percent. Taiwan's underlying economic strength and the political and social cohesion and stability will permit "business as usual.”

A continuing relationship.-As the President made clear, the people of the United States will maintain their current commercial, cultural and other relations with Taiwan through nonofficial means. Except for the defense treaty, we expect all other treaties and agreements with Taiwan to remain in force, until any necessary substitute arrangements are reached. The PRC is aware that this is our intention. This will permit the continuation on an unofficial basis of the many mutually beneficial relations the American people and the people of Taiwan now enjoy. Americans will continue to travel to Taiwan to trade, to invest and to study. Visitors from Taiwan will be able to do the same.

U.S. post-normalization relations with Taiwan will be handled through nonofficial means, much as Japan and other countries have done. The administration proposes to establish a corporate organization which will maintain field offices in Taiwan.

It is anticipated that all necessary arrangements will be made, pursuant to agreement with the authorities on Taiwan, to provide services now being provided by U.S. officials on Taiwan. These services would include receiving applications for visas and passports and providing welfare, protection and similar services.

Notwithstanding the establishment of U.S.-PRC relations, travel and immigration between Taiwan and the United States will continue, and individuals planning to visit the United States in the near future will be processed as before. After January 1, the date of recognition, consular services between Taiwan and the United States will be handled as previously, pending establishment of nonofficial agencies by both sides.

Congress will play a key role in maintaining U.S. programs and relations with Taiwan. Congress will be asked to approve legislation to confirm Taiwan's continued eligibility to maintain existing practical relations including participation in programs such as EXIM, OPIC, nuclear supply, arms sales, et cetera.

JOINT COMMUNIQUE ON THE ESTABLISHMENT OF DIPLOMATIC RELATIONS BETWEEN THE UNITED STATES OF AMERICA AND THE PEOPLE'S REPUBLIC OF CHINA, JANUARY 1, 1979

The United States of America and the People's Republic of China have agreed to recognize each other and to establish diplomatic relations as of January 1, 1979.

The United States of America recognizes the Government of the People's Republic of China as the sole legal Government of China. Within this context, the people of the United States will maintain cultural, commercial, and other unoflicial relations with the people of Taiwan.

The United States of America and the People's Republic of China reaffirm the principles agreed on by the two sides in the Shanghai Communique and emphasize once again that:

-Both wish to reduce the danger of international military

conflict. -Neither should seek hegemony in the Asia-Pacific region or in

any other region of the world and each is opposed to efforts by any other country or group of countries to establish such

hegemony. -Neither is prepared to negotiate on behalf of any third party or

to enter into agreements or understandings with the other di

rected at other states. -The Government of the United States of America acknowledges

the Chinese position that there is but one China and Taiwan is

part of China. --Both believe that normalization of Sino-American relations is

not only in the interest of the Chinese and American peoples but

also contributes to the cause of peace in Asia and the world. The United States of America and the People's Republic of China will exchange Ambassadors and establish Embassies on March 1, 1979.

UNITED STATES STATEMENT

As of January 1, 1979, the United States of America recognizes the People's Republic of China as the sole legal government of China. On the same date, the People's Republic of China accords similar recognition to the United States of America. The United States thereby establishes diplomatic relations with the People's Republic of China.

On that same date, January 1, 1979, the United States of America will notify Taiwan that it is terminating diplomatic relations and that the Mutual Defense Treaty between the United States and the Republic of China is being terminated in accordance with the provisions of the Treaty. The United States also states that it will be withdrawing its remaining military personnel from Taiwan within 4 months.

In the future, the American people and the people of Taiwan will maintain commercial, cultural, and other relations without official government representation and without diplomatic relations.

The administration will seek adjustments to our laws and regulations to permit the maintenance of commercial, cultural, and other nongovernmental relationships in the new circumstances that will exist after normalization.

The United States is confident that the people of Taiwan face a peaceful and prosperous future. The United States continues to have an interest in the peaceful resolution of the Taiwan issue and expects that the Taiwan issue will be settled peacefully by the Chinese themselves.

The United States believes that the establishment of diplomatic relations with the People's Republic will contribute to the welfare of the American people, to the stability of Asia where the United States has major security and economic interest, and to the peace of the entire world.

STATEMENT OF THE GOVERNMENT OF THE PEOPLE'S

REPUBLIC OF CHINA

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January 1, 1979 As of January 1, 1979, the People's Republic of China and the United States of America recognize each other and establish diplomatic relations, thereby ending the prolonged abnormal relationship between them. This is a historic event in Sino-United States relations.

As is known to all, the Government of the People's Republic of China is the sole legal government of China and Taiwan is a part of China. The question of Taiwan was the crucial issue obstructing the normalization of relations between China and the United States. It has now been resolved between the two countries in the spirit of the Shanghai Communique and through their joint efforts, thus enabling the normalization of relations so ardently desired by the people of the two countries. As for the way of bringing Taiwan back to the embrace of the motherland and reunifying the country, it is entirely China's internal affair.

At the invitation of the U.S. Government, Teng Hsiao-p'ing, Vice Premier of the State Council of the People's Republic of China, will pay an official visit to the United States in January 1979, with a view to further promoting the friendship between the two peoples and good relations between the two countries.

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