U.S. Intelligence and the China Hands: Cold War Failures

Introduction: The 'Loss' of China and Its Intelligence Roots

The "loss" of China to communism in 1949 dealt a serious blow to United States foreign policy, yet this was not an inevitable outcome of the Chinese Civil War. In fact, the so-called China Hands had been on relatively good terms with Mao Zedong and the Communist leadership, and the Communist success in the war could actually have been a boon for the United States' position on the world stage — specifically by offering something of a bulwark against Soviet expansion in the form of a "friendly" communist superpower. However, this would never come to pass. Intelligence failures on the part of the Office of Strategic Services, the China Hands' (and their British counterparts') inaccuracy in predicting the speed of Mao Zedong's success, and an intense domestic fear of communism on the part of officials and the public alike all meant that the China Hands' otherwise accurate reports were greeted with distrust, suspicion, and eventually outright hostility. This domestic reaction to communism's rise in China meant that what might previously have been an intelligence blunder became a full-blown disaster: by missing its initial chance to establish a healthy relationship with Communist China, the United States ensured that there would be little to no contact between the two countries for over two decades.

Before examining the experience of the China Hands and the intelligence failures and public reactions that led to their dismissal, it is necessary to provide some historical context — not only regarding the Chinese Civil War, but also the state of international diplomacy in the first half of the twentieth century. The China Hands were first and foremost diplomats, even if their jobs required many of the same skills as straightforward intelligence agents. Diplomacy and intelligence operations have likely been linked ever since both practices first began, but the experience of the China Hands during the Chinese Civil War is especially interesting because the United States' intelligence apparatus was undergoing an important transition: the country's World War II intelligence organization, the Office of Strategic Services (OSS), had not yet transformed into the Central Intelligence Agency (CIA), and the OSS' experience in China had largely been one of frustration and impotence.

Somewhat paradoxically, then, the first step to understanding the experience of the China Hands is an examination of the OSS' activities in China, because this contrast illuminates the different methods and goals of military and diplomatic intelligence officers, and how that contrast contributed to the intelligence failures of the post-war years. Following World War II, the China Hands essentially became responsible for all intelligence regarding China, even as their position as diplomatic officers made military and congressional leaders resistant to their recommendations. This is because the OSS' efforts at intelligence operations in the country were, in some respects, a spectacular failure — leaving the United States' only useful agents in China in the form of diplomats and Foreign Service Officers.

The OSS in Wartime China: Infighting and Failure

First created in 1942, the OSS' actions in China revolved almost entirely around military considerations, naturally focusing on the Japanese occupation, as this had the most direct bearing on the United States' role in World War II. The OSS' operations in China demonstrated a high degree of infighting and incoherence among American military and intelligence leadership, because even at the dawn of the organization's formation it was clear that whoever controlled the OSS would likely control the United States' entire intelligence apparatus going forward.

As a result, OSS intelligence operations in China during World War II were not necessarily conducted with an eye toward the specific culture and objective at hand. Instead, they represented a kind of trial run, with leadership effectively using occupied China as a testing ground for a new organization. The OSS took its cue from British intelligence efforts in China and opted to use Korean nationals as surrogates, under the belief that: "The distribution of the Koreans in important centers opens the way for their employment in intelligence and sabotage work against the Japanese. This is not the case with other nationals, particularly whites and Chinese, who are readily identified in the Japanese domain."

Unfortunately, as this method was "a direct, dogmatic, and most awkward adaptation of the British method," it immediately created Chinese opposition at the highest levels, such that the United States' nominal allies against the Japanese had little interest in cooperating with an agency that "gave off a strong odor of British colonialism." Furthermore, Major General Tai Li of the Chinese Army, who headed the secret police and guerrilla forces, had already backed a faction of Korean nationals who were in direct opposition to those favored by the OSS as surrogates, all but ensuring that the OSS' intelligence operations would meet with failure.

Finally, it should be noted that the OSS concerned itself primarily with the National Government of China and had little interaction with Mao Zedong or his forces. The OSS mission is thus a case of backing the wrong horse twice: first, the OSS essentially supported the wrong group of Korean nationals, and more broadly, it backed the Nationalist government at the expense of developing more fruitful ties with the Communists. Though the Communist faction and the National Government were nominally aligned following the Japanese occupation of China, the two groups operated relatively independently, and the "cooling" of their civil war during World War II represented an intermission rather than an end. This fact seems to have been lost on the leadership of the OSS, if only because their focus was entirely on China's potential use as an avenue of attack against Japan, rather than as the site of a critical political and military conflict in its own right.