In February 1953, President Eisenhower told Congress and the world that the United States would continue to defend Taiwan against invasion from Communist China but would give Nationalist China freedom to take aggressive action against the mainland. After this so-called “unleash” declaration, the Administration told Nationalist China not to act without concurrence of the US, and at the same time began to reassess China policy to make a new hard-line. Planning of new policy was finished in NSC166 and NSC146 in 1953 and revised in NSC5429 in next year.
The objective of new policy was to “reduce the power of Communist China in Asia even at the risk of, but without deliberately provoking war”. Obviously, the new policy was more agreesive than that of Truman Administration. For reducing the power of Communist China, Eisenhower Administration decided to encourage and assist Nationalist China to raid the mainland and attack its merchant shipping. To justify this action the Administration thought it would be wise and declared that the Nationalist Government is the only Chinese Government and the war between the Nationalist and the Communist being a civil war, was not a threat to international peace. This meant the new policy was aggressive but a ‘one China’ policy.
But as the first Taiwan Strait crisis occured in autumn 1954, Eisenhower and Secretary of State Dulles found they were in a difficult situation. If they continue to assist the Nationalist aggressively, they would have to enter the war against Communist China. If not, they should admit that Nationalist China is actually a government of China but not the only government. Dulles said to NSC it is unwise to go into the war for some small islands, the ‘two Chinas’ policy would be better than the hard-line, because with this policy the US can commit itself only to Taiwan and the Pescadores and not to small islands near to the mainland. Taiwan is not a part of China, Dulles said, an ultimate outcome would be the independence of Taiwan and the Communist China might agree to it in the future. Dulles suggested and the NSC agreed that the US take the situation to the UN Security Council, on the ground that the war between Communist China and Nationalist China was not purely a civil war, Communist China's action being a threat to international peace. At the same time, NSC decided to conclude a mutual defense treaty with Nationalist China that would be applicable only to Taiwan and Pescadores.
Nationalist China welcomed the mutual defense treaty. Actually they had asked the US to conclude such a treaty many times before even after Dulles had rejected their suggestion. But when they asked for the treaty they did not forget that they were ‘Nationalists’, they stressed that they were the government of China and against any ‘two Chinas’ policy.
The US-Nationalist mutual defense treaty was concluded in December 1954. Dulles thought the treaty was a step to divide Taiwan from China and independence of Taiwan which would be in the interest of the US.
The traditional China policy of the US was not to divide China. In the Cold War the US decided to divide China because they believed it was the best method to prevent Taiwan from falling into the Communist's hands. But ‘two Chinas’ policy was not confined to the Cold War. Even after the Cold War ended, ‘one China or two Chinas’ is and will continue to be the most difficult problem in Sino-American relations.

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