Recognising China. How it was done.

Jan 19, 2021

It is almost 50 years since Australia and China agreed to enter into diplomatic relations. The path to agreement had its complications and soon after I retired from DFAT I set about refreshing my memory and that of others involved at the time. The result of this research was published in “Quadrant” in March 1998 and is repeated here without change (though many named here have since died). It offers an inside view of what took place.

Australia announced its recognition of the People’s Republic of China on 22nd December 1972, 25 years ago. As the Department of Foreign Affairs’ man in Hong Kong from 1969 until October 1972, and then as head of its China section back in Canberra, I had a pretty good inside view of the McMahon government’s travails over China policy in the period leading up to the December 1972 election, and then of the rush to recognition under the new Whitlam government.

China Policy under McMahon

William McMahon maintained tight control over the coalition government’s policy towards China, first as Foreign Minister, from November 1969 to March 1971, and then as Prime Minister. He saw holding the line against recognition of China as important for domestic policy reasons. After losing the 1972 election McMahon told others that the coalition had made a mistake in not moving to recognise China.

It is clear, however, that before the election he firmly believed that any move to recognise China (and to dump Taiwan) would alienate the Democratic Labor Party and he believed this would be disastrous for his government’s re-election prospects. His belief seems questionable – where after all did the DLP have to turn if it did not support the coalition? – but there seems no doubting the strength with which McMahon held it.

International developments at the beginning of the seventies conspired to force the coalition government to look anew at its China policy. In particular there was the announcement in October 1970 that Canada and China had reached agreement on recognition and diplomatic relations. Canada had blazed a trail which many others soon followed.

The tide was turning against Taiwan, where the Holt government had opened an embassy as recently as 1966. At home the Labor Opposition’s clear policy in favour of recognition of China raised the pressure on McMahon for some kind of policy response. This came in May 1971 with the rather grand title of “progressive normalisation’. It amounted to a decision to seek to develop a dialogue with China on practical issues, including trade, while avoiding the issue of recognition.

Having announced an exploratory dialogue with Peking, the government decided that Alan Renouf, then the Australian Ambassador in Paris, should test the Chinese waters. Renouf had his first meeting with his Chinese counterpart in Paris, the senior party figure Huang Chen, late in May 1971. It was a fairly robust exchange, with Huang telling Renouf flatly that China was prepared to discuss the establishment of diplomatic relations with China and only that. A second meeting between the two early in July, prompted by the government’s anxiety over Gough Whitlam’s forthcoming visit to China that month, found no change in China’s position.

It came as no great surprise in Foreign Affairs that these approaches to China proved unproductive. From the beginnings officials in Foreign Affairs who were advising on China policy had strong doubts that “progressive normalisation” would have any attraction for China. They were uncomfortable with a policy driven more by domestic politics than by national interest. Renouf was to make it clear later in his writings that he had seen no prospect of making any headway with the brief he had been given by Canberra.

Henceforth the coalition’s “progressive normalisation” was to become more a line for the public rather than a real policy. Its suggestion of a certain dynamism in the coalition’s China policy, with some prospect of forward movement, was largely a fiction.

Whitlam’s Visit to China

Whitlam’s bold decision to visit China in July 1971 brought the differences between government and Opposition over China into high focus. Whitlam and Graham Freudenberg, one of the party accompanying Whitlam, have recorded how the visit was arranged with the assistance of the Australian academic Ross Terrill, and the French Ambassador in Peking, Etienne Manac’h, the latter fact a sore point for the coalition.

The visit was a notable success for Whitlam. It’s centrepiece was a substantive conversation with the Chinese Premier, Chou Enlai, which to the surprise of the Australians was held in the presence of the Australian journalists travelling with Whitlam (at least one of whom, David Barnett, made a transcript).

Chou was a testing interlocutor, opening up the subjects of Australia’s role and its relationships with the United States and Japan, yet Whitlam acquitted himself well. Nevertheless back home the government mounted a campaign to vilify Whitlam for swallowing Chinese propaganda and selling out Australian interests.

These criticisms were suddenly choked off when it emerged on 15th July, just a couple of days after Whitlam had left China, that Henry Kissinger, President Nixon’s national security adviser, had been in China at the same time and had reached agreement on a breakthrough in the China-US relationship. Kissinger’s visit and the policy which inspired it had been well-kept secrets including, remarkably, from the US State Department itself. The McMahom government was suddenly left embarrassed and flat-footed. Whitlam, lucky in his timing, was left clearly in the ascendant on the China issue.

The McMahon government could fairly argue, and it did in public, that it had in effect been seeking through “progressive normalisation” the kind of relationship with China which the US had now achieved. The US after all had not agreed to the formal recognition of Peking and there was still a US embassy in Taiwan. In March 1972, after President Nixon’s visit to China which saw the signing of the Shanghai Communiqué, the government was to send Renouf for a third meeting with Huang Chen in Paris to ask specifically whether Australia might follow the same path in its relationship with China as had the US. The short answer was no. What Huang did not say, but what was clear, was that at the centre of the breakthrough in US-China relations was their mutual need to offset the perceived threat to each of them from the USSR. The US as a superpower had a value to China in this regard which Australia could not offer.

The Kibel Affair

Early in September 1971, at the time when the McMahon government’s China policy appeared to have come to a dead-end, it had a reprieve from an unexpected quarter. A Melbourne businessman, James Kibel, came to the government with proposals which had been put to him by mainland Chinese official in Hong Kong – that Andrew Peacock, then a junior minister, might make a private visit to China and that an Australian trade delegation also make a separate visit.

The Kibel family had had a long trading connection with China, centred on their import of Chinese machine tools. The nomination of Peacock by the Chinese, odd at first sight, seems to have been made only because James Kibel had mentioned to them that he had a social acquaintance with Peacock, a fellow Melburnian.

It was through Peacock that Kibel relayed the Chinese suggestion to the McMahon government. I was then instructed, early in September 1971, to follow up with Kibel in Hong Kong to get a clearer picture of the Chinese proposals. From memory, we first met to do this in the downstairs bar in the Mandarin Hotel where Kibel was staying. I found him earnest and level-headed and there seemed no reason to doubt his story. A week or so later Kibel had meetings in Canberra with McMahon and other key ministers and officials. He made a good impression and the government soon decided to pursue wholeheartedly the idea of a visit to China by an Australian trade delegation but to leave the idea of a Peacock visit on a back burner. Kibel quickly conveyed this to his contacts in Hong Kong and the increasingly impatient McMahon government began a long wait on the Chinese response.

In the meantime work proceeded quickly in secret, with the close personal involvement of McMahon, to assemble a high-powered trade delegation which was to include the prominent businessmen Ian McLennan and Kenneth Myer as well as government officials.

It was not until November 1971, over two months after the initial approach to Kibel, that a reply came from Hong Kong indicating that the Chinese had gone cold on the idea of a trade delegation. In retrospect what seems to have happened was that an initiative taken by mainland officials in Hong Kong had not found favour in Peking. The fact that in the interim Australia had taken a stand unwelcome to China on the Chinese representation issue in the United Nations was probably also a factor.

Over this whole period some of McMahon’s public utterances on China were the object of wide-eyed wonder among his officials. The nadir came in February and March 1972 when in quick succession he put to parliament an account of the Kibel exercise which was hard to recognise (he suggested wrongly that China had required Peacock to resign before visiting China), announced that he would establish a diplomatic mission in Hong Kong to continue the dialogue with China (a nonsense), and topped things off with a statement that he favoured independence for Taiwan (something unacceptable to both Peking and Taipei).

The Blue Book

It became increasingly clear as the 1972 election approached that it was likely to bring a change of government and that recognition of China would be an early priority for Labor. By then back in Canberra from Hong Kong, I was involved in what at the time was considered a highly sensitive exercise – the preparation of a detailed brief by Foreign Affairs analysing all the issues likely to come up in a negotiation with China on recognition. While today there is a well-established convention that the federal bureaucracy prepares itself ahead of an election for the contingency of a change of government, this was not the case in 1972. The fact that there had been no change of government for twenty-three years was a major factor. The air of conspiracy was further heightened by the fact that the spare office which I was asked to take was windowless. There the first drafts were prepared of what to become known by its authors as the Blue Book (from the colour of its cover).

The principal hand shaping the Blue Book was that of Michael Cook, then the head of the department’s North Asia Branch, later to go on to direct the Office of National Assessments and to serve as Australian Ambassador in Washington. The late Mick Shann, then a deputy secretary of the department, kept a watchful eye on the exercise. I recall Shann advising matter-of-factly that if the Liberals got back in, the work we were doing was to be “flushed straight down the dunny”.

Cook has a clear memory of a strange episode in which the late Keith Waller, then secretary of the department, told him firmly not to proceed with the paper – apparently to protect Waller’s position in the event that it came public that Foreign Affairs was preparing for a change of government. The exercise went ahead nevertheless. Waller later rang Cook the morning after the election asking for the Blue Book, saying he knew Cook well enough to know he would have disobeyed his earlier instruction!

The Blue Book addressed the key issues of alternative formulations which might be used to cover the Taiwan issue in a joint communique with China on recognition. Peking, then and now, claimed Taiwan to be a province of its People’s Republic of China. It required countries seeking agreement on mutual recognition to state their position, in a form acceptable to China, on this claim. Most countries were reluctant to give full endorsement to Peking’s claim to Taiwan, not least because they wished to give Peking no encouragement to try to take Taiwan by force.

There were ways around this problem. The Canadians had established a valuable precedent by using the formulation “take note” to describes its attitude towards the claim that Taiwan was a part of the People’s Republic; a formula which, it could be argued, neither endorsed nor denied that claim. This was to be Australia’s preferred outcome in its negotiation but there were a number of other formulations which, again it could be argued, amounted to much the same stand.

The Blue Book addressed a range of other practical issues which it was anticipated would come up in the negotiation, including the nature of any continuing unofficial links between Australia and Taiwan; the future of Taiwan’s branch of the Bank of China which had operated in Sydney since the war; and the future of Taiwan’s four properties in Australia. It also looked at alternative venues for the negotiation with China, coming down in favour of Paris, where Renouf had had his contacts with Huang Chen. It was to prove a comprehensive brief, identifying all the issues which were in fact raised, if not anticipating the weight which China would place on each of them.

The fact that the Australian side was well prepared for the negotiation was to be all the more important, as the speed with which Whitlam wished to move on China once in government (as on so much else in those heady days) had not been fully foreseen in the department. The Blue Book was passed to Whitlam by Waller on Sunday 3rd December, the day after the election. Whitlam was impressed by Foreign Affairs preparations, though it seems highly unlikely he ever found time to read the Blue Book. He soon made it clear that he wanted an agreement with China by Christmas. Australia in fact was to complete its negotiation with China inside twenty days. This compares with the twenty months Canada had required to negotiate its terms with China – admittedly a path-breaking exercise.

The Negotiation

The negotiation with China began in the Chinese embassy in Paris on 7th December and was concluded with the signature of a joint communiqué in the then Australian official residence in Paris on 22nd December (Canberra time in each case). The public announcement was made late the same day, the Friday before Christmas. There were four substantive sessions of negotiation between the two ambassadors. Before each session a detailed brief was prepared by Cook and his team, approved by Whitlam and then cabled to Renouf. While due process was thus observed, there was no sign that Whitlam took any interest in the details of the negotiation.

On the key issue of the communiqué formulation setting out Australia’s position on Peking’s claim to Taiwan, China resisted Australian arguments in favour of the Canadian formula (“takes note”). The end result was that Australia “acknowledges the position of the Chinese government that Taiwan is a province of the People’s Republic of China”, the formulation which had been accepted by Britain in a joint communiqué upgrading relations with China to full ambassadorial level the previous March.

The issue of residential unofficial links between Australia and Taiwan was also more vexed than had been anticipated. Japan had set was seemed an important precedent in its negotiation by obtaining Chinese acceptance that Japan and Taiwan would maintain an unofficial presence in each other’s country. Initially the Chinese seemed accepting of such an arrangement between Australia and Taiwan, but later in the negotiation they took a hard line against it and Australia had to abandon plans it had been developing to maintain an unofficial office in Taiwan headed by a former trade commissioner.

The issue of Taiwan’s four properties in Australia was also more prominent than had been anticipated, with China arguing that the Australian government should act to prevent Taiwan selling them. Australia had the convincing riposte that the properties belonged to the government of China, and that it would continue to recognise Taiwan as the government of China until such time as there was agreement to recognise Peking. Until then Australia could do nothing. In fact Australia issued a warning to prospective buyers just before agreement was reached, but Taiwan had managed to dispose of all its properties before 22nd December. China was not to make further issue of this.

It was in fact a most unequal negotiation, Whitlam having made it plain, both in private and in public, that he wanted a quick result, with Christmas the target. This weakened Australia’s hand in the negotiation, leaving little scope for it to dig in its heels on the central issues.

Did this matter? Probably not a great deal. The communiqué formulation on Taiwan, while not the Canadian, fell short of endorsing China’s position (or so it could be argued in the unlikely event of need) and Australia was in respectable international company in using it. With more time, and perhaps more subtle handling on Australia’s part, it may have been possible to gain tacit Chinese acceptance of an unofficial Australian presence in Taiwan, something that has of course proved possible since.

Looking back, the wonder is that China did not more fully exploit the strong position in which Whitlam’s haste placed it. It seems possible that there may have been some in Peking who felt that more advantage could have been taken. There was an incident late in the negotiation when Renouf arrived by appointment at the Chinese embassy to check the text of the communiqué which had been agreed. In Ambassador Huang’s absence he was confronted by one of Huang’s staff who sought to reopen negotiation on the text. To Renouf’s credit he turned on his heel and left. The negotiation was put back on track soon afterward when Huang rang Renouf to say the agreed text should stand.

Closing the Embassy in Taiwan

These events meant that Hugh Dunn, the Australian Ambassador in Taiwan at the time, was put in the unenviable position of having to close down his embassy in record time. Widely anticipated though the result of the 1972 election had been, there had been little indication of the great speed with which the new Australian government would want to move on China. In the interests of restricting knowledge of the exercise, Dunn had not been informed of the preparations being made in Foreign Affairs before the election, though he had wisely done considerable planning of his own.

Canberra told Dunn on 5th December that he should leave Taiwan by the 15th. It is greatly to his credit that he and his family met this schedule and managed to resolve most of the problems of disestablishing an embassy. At the same time he had to talk to the Taiwan government about such matters as as the possibilities for residual unofficial relations and closure of the Bank of China in Sydney (something Taiwan readily agreed to do). In fact the way Taiwan’s ministers and officials reacted to Australia’s change of affections under the Labor government – they expressed varying degrees of regret but without bitterness – won them some sympathy and respect in Canberra.

Ironically, Dunn was to serve as Ambassador in Peking in later years, the only Australian ambassador to have been accredited on both sides of the Taiwan Straits. He was to meet Huang Chen there as Minister of Culture and reminisce about the events of December 1972. Huang told him the negotiation with Australia was the easiest of all those he had done in Paris.

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