# Secretary Kissinger's Talks in China, November 1974/Lin-Habib Memcon Nov 26

DEPARTMENT OF STATE
Memorandum of Conversation
DATE: November 26, 1974
SUBJECT: Secretary Kissinger's Visit to Peking: Counterpart Discussions on Exchanges and Claims/Assets (First Session)
PARTICIPANTS: Lin Ping - Director, American and Oceanic Affairs Department Tsien Ta-yung - Counselor, PRC Liaison Office in Washington Cheng Chi-hung - Deputy Director, U.S. Section Ni Yao-li - Staff Member, American and Oceanic Affairs Department Chao Chia, Staff Member, American and Oceanic Affairs Department Ambassador Philip C. Habib, Assistant Secretary of State for East Asian Affairs Oscar V. Armstrong, Director, EA/PRCM John H. Holdridge, Deputy Chief, U.S. Liaison Office, Peking Christine Vick, Secretary's Office
(The meeting was held in the Concert Hall of the People, 2:00-3:15 p.m.)
| Lin: | Have you had a good rest? |
| Habib: | Yes. We had a very nice lunch. Your hospitality is overwhelming. |
| Lin: | We are very glad to have this opportunity of having a talk with Mr. Habib, Mr. Holdridge and other gentlemen on bilateral specific questions between our two sides. Present here today, I think, are friends who were here last year except for Mr. Habib and the Miss. First I would like to extend to you my welcome. Though Mr. Habib wasn't here last year for the discussions on bilateral matters, I believe Mr. Habib is quite aware of the practice in this regard. |
| Habib: | Yes. Since I had not met with Mr. Lin, my deputy, Mr. Hummel, informed me fully of the previous conversations. We are all looking forward to this opportunity to discuss a few specifics with you. As the Secretary, Dr. Kissinger, said this morning, there are matters which interest us and we are pleased to discuss them with you, and we look upon ​these matters in the political context and as part of the overall process in which we are engaged. |
| Lin: | This is already in the agreement reached between our two sides in February 1973. |
| Habib: | How would you like to proceed? |
| Lin: | What suggestions would you have in this regard? |
| Habib: | I would suggest as is usual, that we might discuss the status of the exchanges that are about to take place. I understand that there have been preliminary exchanges between the facilitative Committees and their counterparts here with regard to the cultural and scholarly exchange for 1975. I think that the recent exchanges have reached a stage where it might be of interest to exchange views on what has transpired to date. As the Secretary pointed out this morning, the particulars and the numbers are not as important as the general progress and the general consequences of these exchanges. In our view, there is no question that the exchanges have an important part in the overall process toward normalization. We think that the National Committee for China-US Relations and the Committee for Scholarly Exchanges, are fulfilling the roles that they were expected to fulfill. From my observations of the manner in which they have been operating, this has been satisfactory to all concerned and we expect that degree of satisfaction to be maintained. Have you been satisfied with the manner in which the facilitative Committees have been functioning? |
| Lin: | Well, I think I would like first of all to hear what suggestions or comments Mr. Habib may have on the bilateral specific questions between the two sides. How long do you expect that we shall have for our discussion this afternoon? |
| Habib: | I think we should be relaxed and informal and we both need to be back at the Guest House before 3:30. We have two or three days before us in which we can fit in our time as is convenient to you. We might start with the exchanges because we have something specific to discuss and then we can go on to something else. |
| Lin: | This means we shall have at most, one hour for our discussion. |
| Habib: | If there is something to go on with, we can go on today or tomorrow, as you wish. |
| Lin: | Maybe Mr. Habib will take the lead to let us know what suggestions or considerations you might have, including the following two aspects: namely, the cultural exchanges between our two sides and the question of claims to private properties and assets. |
| Habib: | I will lead on the first one at this time. As I understand it, the preliminary exchanges with the Committee on Scholarly Communications and the National Committee on U.S.-China Relations have provided a list of proposed exchanges for 1975. In respect to the proposals that were made by the Chinese, the Chinese negotiators have suggested that in general, you want to maintain facilitated exchanges on the same quantitative and qualitative level. Is that correct? |
| Lin: | Yes. |
| Habib: | In the response received from the Chinese on the particular proposals, there have been, in terms of American groups coming to China under the auspices of the Committee on Scholarly Communications, 5 projects. I believe they are known to you and I won't list them unless you wish me to. So we will consider that as part of the record. With regard to the Chinese groups going to the United States, there were 7 groups proposed. In its response the Committee on Scholarly Communications accepted all the proposals for the American groups going to China, in accordance with your wishes, and has suggested that there be numerical reciprocity. That is, you should add two more American groups from the original proposals that were made to you. For the Chinese groups going to the United States there was a request for clarification with regard to some of them to determine whether the delegations would be scientifically or commercially oriented. That was so the commercially oriented could be handled through other channels. The three groups were petrochemicals, communications techniques, and industrial automation. ​With regard to the proposals made by the National Committee, the Committee has accepted the Chinese proposal with respect to the amateur track and field team but is in the process of determining whether or not it could go. As I understand it, that has not been clarified. Here again, with respect to National Committee, I think there were three proposals for American groups to go to China and two with respect to Chinese groups going to the United States. Again, the suggestion was made that we achieve numerical reciprocity and that would mean one more group from China. It was suggested that a group of Chinese municipal officials visit the United States, or a visit by a delegation of the Institute of Foreign Affairs. The municipal officials group was on the 1974 list but was not implemented. I think that covers those items in which preliminary discussion has already taken place, and I would be interested in any reaction Mr. Lin may have with regard to these cultural exchanges. |
| Lin: | Would it not be better if you go on and finish the second aspect of the question and then we shall exchange our views? |
| Habib: | I will do it any way you wish. As you will recall, we have discussed the desirability of having some of our Congressional groups come to China and you have in the past been forthcoming in this regard. This has been very helpful to the general thrust of our policies, which is mutually desirable. I might say this has produced a remarkable friendly reaction to your hospitality which has become renown among these groups, but in addition, it has produced a serious understanding which is also desirable. Your hospitality and the interest with which these Committees have been discovering your country is reflected in some requests which we have now received. The Appropriations Sub-Committee of the House of Representatives has dealings with our State Department appropriations. The Chairman of this Committee has spoken to us of his desire and that of the members of the Sub-Committee to visit the People's Republic of China. This Committee is of particular ​importance to us because it is the Committee that deals with the State Department budget. Mr. Armstrong and I and Mr. Holdridge do not want our pay reduced, so we have a great deal of interest in that Committee. The Chairman of the Sub-Committee on Asian and Pacific Affairs of the Foreign Affairs Committee of the House of Representatives has also indicated an interest on the part of his Sub-Committee, for its members to visit the People's Republic of China. This Sub-Committee is part of the overall Committee which deals with foreign affairs legislation and is the particular Committee that deals with Asia. It is naturally most interested in visiting the People's Republic of China. Additionally the women members of the House of Representatives have indicated an interest in a delegation of women members of Congress from the House of Representatives to visit China. Some members have discussed this interest with the wife of the Chief of your Liaison Office. In making their interest known to you, we would hope you would consider them and indicate your general attitude toward receiving such groups. We could then, at a later stage and an appropriate time, get into the details of the proposed numbers, times and programs that might be most suitable for such a group. And, as is usual, if there are any groups of similar nature that you should wish to send to the United States on a reciprocal basis, we are open to any ideas that you may have. To follow Mr. Lin's proposal that I proceed with any ideas I may have, there are one or two things that I would like to present for your consideration. You will recall in 1973 a group of White House fellows visited China. This is a very distinguished group of young Americans that are specially chosen for a year's work in the environment of the White House and I am sure you will recall the caliber and characteristics of these people from their 1973 visit. The present White House fellows have suggested a visit to the People's Republic of China and a return visit by young Chinese leaders. If that proposal is of interest to you, we would be prepared to pursue it. ​Finally, there is a great deal of interest in matters effecting the environment and if there is much interest in a reciprocal exchange of delegations that are suitable for exchanges on environmental matters, we would consider that as useful. I think that I have pretty well presented a variety of specific and general ideas within this general range that we think we can accomplish to our mutual interest. I would be interested in any reaction or comments the Director may have. |
| Lin: | I have said that there are two questions between our two sides in connection with bilateral matters. One is the cultural and scholarly exchanges and the other is the claims to private properties and assets. I think Mr. Habib has just covered the first question and I would like to go on with the second. That is what I understand the bilateral matters included--the two questions. I am not sure Mr. Habib means to say there exists only one question between us and the second one doesn't exist. |
| Habib: | Well, I think it would be preferable to discuss the exchanges and continue on to the other in its turn and not mix the two up. We can discuss the cultural and scholarly exchanges and then come to the other in its turn. |
| Lin: | My idea is that maybe the United States side will proceed with its views and ideas upon these two questions this afternoon and after that we will express our views. |
| Habib: | There has been a considerable exchange already between the two sides on the question of claims and assets and we have now reached the stage whereas one can recapitulate the positions fairly simply. So far as the subjects which came under discussion today, the cultural exchanges between our two countries and claims to assets, I think the ideas of the Chinese side have already been made clear to the United States side. Therefore we are ready to hear what you might have on this subject. |
| Habib: | Where we stand on the claims and assets situation--as I understand it, there has been a proposal by your side with respect to those assets which have already been transferred, that there be a payment made to the United States government. I think the amount proposed by your Prime Minister was $17 million to cover that aspect--what we might call a gap--in the third country bank situation. We have stated that we will accept this proposal. Secondly, there was the question of bonds. We have indicated that this is not a matter in which we intend to involve ourselves in any way as a government. I think that matter is resolved as a problem. The only remaining question is the technical one: some way of identifying the assets so that we are in accordance with our own legal requirements and not subject to litigation which would be directed toward the American government. I think there have been draft letters back and forth which have achieved a degree of understanding of the principles involved and now a decision is needed to proceed in the manner which meets the requirements of each of us. If you would like to proceed on that basis I don't imagine there would be too much difficulty. I consider from my point of view that the agreement in principle is still valid, and as the Secretary said this morning, once an agreement is reached, just the details need to be worked out. Does the Director agree with me that generally speaking we have an agreement in principle and it is only a matter of finding a mutually agreeable way of achieving these precise principles? |
| Lin: | With regard to claims and assets, on our part we have formally made a reply on June 14 this year to your memo dated December 22, 1973. As we understand it, if we proceed from the understanding reached between us in February 1973, a package settlement will be realized--in fact, could have been already realized--on the basis of political considerations. But in March last year, the United States side put forth a draft that created some side issues. The first of them refers to a phrase "designated or specially designated nationals" and the second required us to cover all the liabilities that occurred before 1949. With regard to this we made our new proposal last November. Judging from a memo that we ​received from the United States side dated December 22, 1973, it is clear to us that though the United States side has changed the way it handles those questions, it had not given up the unreasonable demands in essence. Therefore we made our formal reply to you on June 14 stating our principled position. What remains before us is how the US side will, on the basis of the understanding on a political package settlement, propose to solve this question in accordance with our reply made on June 14. I have just heard what Mr. Habib had to say on this subject and I understand those represent views you held before our June 14 reply. And you have not touched on what you have to say after receiving our reply made on June 14. |
| Habib: | I read the June 14 reply and maybe it is my ignorance as a newcomer, but it struck me as quite probable that there is a degree of misunderstanding. I would like to explain to you why I come to that conclusion. In doing so I will attempt to reply to your June 14 memo. First, we don't reject the idea of a package deal. On the contrary, I believe that it is the correct way to handle the matter. I don't believe there is any difference in principle. Now, as far as the phrase that you mention that you found objectionable, I think we have concluded it isn't the phrase that is important; we are not wedded to these particular phrases. We are hoping to find some way of defining the assignments so that we can solve the problem. As for the third element that you mentioned on the liabilities occurring before 1949: we have no legal interest in these liabilities. As I understand it, we have no interest in your acknowledging the existence of these liabilities and we have never proposed that you acknowledge these liabilities. So there again, this may have been a misunderstanding. We are not asking that you acknowledge in any way the existence of those liabilities. If there was any misunderstanding, I hope that I have helped to clear it up. ​As I said earlier, it seems to me that we have reached agreement in principle with regard to the items the Director has mentioned and the $17 million which you proposed in an earlier exchange. So the whole issue is to implement the agreement in principle with such tidying up as is needed. This is not a matter of extreme importance or urgency, as the Secretary mentioned this morning, but we hope to get clear that there isn't a difference in principle, as suspected in your note of June 14. I didn't understand that note, but now I think I have a better understanding of what might have led to that note. |
| Lin: | In my opinion, what exists between us is not merely a misunderstanding. What really exists is that the United States side insists on its demand to create some side issues. That is to say, the US side does not stick to the spirit of the understanding reached in February of 1973 to find a package settlement. That is why I think it is a matter of principle. In other words, we have not reached agreement on how to dispose of this question between us, and our stand has been clearly stated in our reply of June 14. We mentioned last November the transfer of $17 million to the US side that we have drawn from the third country banks. We made a considerable concession in accordance with the general understanding on a political settlement. And we acted upon the understanding that your side thought it would be easy to settle the question of the liability that occurred prior to 1949. But actually your reply in December does not conform to the commitment that you had expressed in November. That is why I say there have been some changes in the manner of your disposing of this question, while in fact you insist upon the unreasonable demands that you put forth. So we have explicitly stated that we cannot but withdraw the proposal we made before. |
| Habib: | Can I ask a few questions? |
| Lin: | This question is still outstanding between us. And I thought Mr. Habib might have put forth some proposals that would be to the satisfaction of both sides. |
| Habib: | First, it is my understanding that we made the same statement in December as in November with respect to the liabilities prior to 1949. In effect, they will not be an issue between us and let's not make it one. But let me examine that again and we will talk about it again. I don't believe that a matter we do not ask you to acknowledge can become an issue ​between us and we don't ask you to acknowledge it. But let me examine the proposal you have made and we will talk about it again. |
| Lin: | I have to say that I do not agree with Mr. Habib as to the liabilities occuring before 1949. -- the way you put question. As it is, the time is very very short. We can go on with our talks or find some other |
| Habib: | I think we should find another time. |
| Lin: | All right, so we have just expressed some of our preliminary views on this matter. |
| Habib: | I think it was a very useful preliminary exchange. I hope I have shed some light on the matter. |
| Lin: | I would also welcome your further explanation on this matter. |
| Habib: | And I will expect to hear further about both subjects. With respect to exchanges, you owe me a little bit. |
| Lin: | Yes, without question. |