Key point: The Nationalist forces that fled to Taiwan made counterintelligence a priority.

In the summer of 1949, Chiang Kai-shek and his Republic of China (ROC) government appeared doomed. Shanghai and Nanjing, then China’s capital city, had fallen to Mao Zedong's communist forces, and Chiang's units all over China were collapsing under the weight of mass attack and defections.

Southeastern China's harbors were clogged with ships ferrying ROC government officials, troops and treasure to Taiwan, the final redoubt of “Free China.” Soon, only a long string of offshore islands stretching from Zhoushan in the north down to Hainan in the south would be left under Chiang's control. It was at this pivotal moment in history that the Chinese People’s Liberation Army (PLA) began planning the invasion of Taiwan.

From June 1949 to June 1950, PLA generals under Mao Zedong undertook intensive battle planning and preparations for what was to become the formative strategic challenge facing China’s new communist leadership. An unexpected turn of history kept Mao and his generals from putting their Taiwan invasion plan into action. On June 25, 1950, North Korea invaded South Korea, and U.S. President Harry Truman swiftly decided to save South Korea’s friendly government, while also ordering the U.S. Seventh Fleet to prevent a possible Chinese invasion across the Taiwan Strait.

As a consequence, China's new government aborted the Taiwan invasion, and many of the forces that had been training for the mission were subsequently redeployed to the Sino-Korean border area. In October 1950, “Red” China intervened on the side of North Korea, sending a flood of troops equipped with jungle warfare kits into frigid battles against the United Nations forces led by the United States. This intervention resulted in what was to become two drawn-out and dangerous stalemates which still exist today: one on the Korean Peninsula, the other across the Taiwan Strait.

But why was China’s invasion plan not put into action before the outbreak of the Korean War? How did Taiwan and its ROC government survive? The answer lies in a little known, but deadly, case of espionage.

The Invasion Plan

The Battle of Taiwan was intended to be the final chapter in the Chinese Civil War, a conflict that had ravaged China from 1927 to 1949, interrupted by the Japanese invasion and occupation of Manchuria and Eastern China during the Second World War. Mao and his communist forces were essentially on the defensive throughout the first two decades of their insurgency. They lurched from one battlefield defeat to the next, husbanding their strength and avoiding any decisive losses. The scene suddenly changed in early 1949, when they took the upper hand against the ROC Army, winning a series of crushing campaigns across northern and central China.

In March 1949, Mao ordered his generals to add Taiwan to the list of strategic objectives to be captured. Previously, the strategy for 1949 had been to seek the “liberation” of nine provinces in China. After the dramatic series of battlefield victories, the list of provinces to seize by the end of the year was expanded to seventeen, including Taiwan.

Events developed rapidly. Within just a few months of the strategy shift, PLA troops had captured Nanjing and Shanghai and were marching down the eastern seaboard of China on their way to Fujian Province, across from Taiwan. At this moment, Mao contacted the star commander of 3rd Field Army, General Su Yu, and his chief of staff, General Zhang Zhen. On June 14, 1949, he directed them via telegram to find out whether Taiwan could be taken in a short timeframe and told them to plan a large-scale military operation to capture the island.

In his message, Mao alluded to the possibility of using covert actions to get Nationalist forces to defect at the key moment―something his undercover intelligence officers in Taiwan were already preparing. Indeed, the PLA needed more than ships, planes and troops to conquer Taiwan. For the invasion plan to work, the army needed a large network of secret agents buried in Taiwan’s society, whose cardinal mission was to recruit ROC military commanders, convincing them to defect (preferably with their entire units intact) to support communist operations when the amphibious landings began.

Beyond enticing Nationalists officers to betray their cause, secret agents were also needed for fomenting social unrest, organizing riots, and engaging in acts of sabotage all across the island. The effort dated back to April 1946, when the top secret “Taiwan Works Committee” was established in China. Over time, this covert action group developed an extensive web of undercover operatives, who were spun across Taiwan and poised to strike at the key moment.

The Spymaster

At the dark heart of Mao's covert operations was Cai Xiaogan, the spymaster who served as the PLA's station chief in Taipei. Born in 1908, Cai was a Taiwanese native who had grown up under Japanese colonial rule. In the 1920s, he left Taiwan as a teenager to attend school in Shanghai. On campus, far from home, Cai was apparently lonely and confused, making him easy prey for communist recruiting efforts. After a period of cultivation, Cai joined Mao's insurgency against the ROC government.

Cai’s intellectual potential was readily apparent, and like all the best and the brightest he was assigned to the Red Army's political department. He excelled at writing and was given a coveted position as a propaganda officer. Eventually he became the only Taiwanese native to survive the Long March.

During the Second Sino-Japanese War (World War II), Cai became an expert in interrogating and reprogramming Japanese prisoners and translating and analyzing their documents. Born a Taiwanese subject of Imperial Japan, he was a fluent speaker of Japanese. Over time, Cai’s spy skills became so renowned that he was asked to write teaching materials to guide other intelligence officers who would follow in his footsteps.

In early 1946, just months after the Empire of Japan surrendered to the Allies, Cai arrived in Shanghai and began preparing for his next mission. He had been hand-picked to lead a group of secret operatives against Nationalist forces in Taiwan. In July 1946, he adopted a new identity and infiltrated back into his native island. It took him and his team little time to blend in and establish themselves. Reports indicate that they developed and recruited nearly seventy local agents within their first six months, and by 1948 they controlled an estimated 285 agents.

In 1949, Nationalist forces began a mass exodus to Taiwan, and Cai's spy network surged in the depressing tumult. In December 1949, undercover operatives under his control reportedly numbered up to 1,300 agents. Additionally, Cai estimated that up to 50,000 civilian assets, almost all of them unwitting, could be mobilized for factory strikes, protest marches, and campus riots. He told his Third Field Army superiors that his covert forces would be ready to play their part in eroding support for Chiang’s regime just before the landings started. He recommended that the invasion be launched in April 1950, when the weather would be most favorable for amphibious operations.

In late 1949, Cai had good reason to be optimistic. He had a prize agent, a two-star ROC general, Wu Shi, who had retreated to Taipei from Nanjing. General Wu had been assigned to the Ministry of National Defense (MND) General Staff Department, a position which gave him access to war plans and other highly sensitive strategic information. Wu met repeatedly with Cai, handing over top secret documents, including military maps showing the locations of landing beaches, troop dispositions and military bases on Taiwan. Wu also purloined documents on troop deployments and artillery emplacements on the Kinmen and Zhoushan islands. These documents were subsequently smuggled into mainland China through a trusted female officer named Zhu Fengzhi. Great damage had been done to the defense of Taiwan.

Spy Games

Unbeknownst to Cai or Wu, a net was slowly closing around them both. In the fall of 1949, Chiang Kai-shek began to consolidate his retreating forces on Taiwan. Having experienced a fatal hemorrhaging of intelligence and the defection of key military units in mainland China, he was determined to eradicate undercover spies who had infested Taiwan. It was a race against time. Chiang needed to clean up his ranks before communist agents could lure away his displaced and demoralized officers. Recognizing the perils facing him, he made counterintelligence and counterespionage operations his emergency government's top priority, placing the MND Counterintelligence Bureau in charge of the dragnet.

The first breakthrough for Chiang's spy catchers came in September 1949, when they uncovered a spy ring and underground printing press in the port city of Keelung. As a consequence, they were subsequently able to track down the official in charge of PLA underground intelligence work in southern Taiwan. They arrested him in Kaohsiung that November. Cai’s long-cultivated spy network then quickly came unglued, as one communist agent after the next was apprehended and compromised.

By January 1950, Taiwan's men in black had closed in on Cai himself. Counterintelligence officers discovered his home address in Taipei and quickly moved to arrest him. When it occurred, the arrest came as a surprise to Cai, but did little to knock the wind out of his sails. Cai, himself a seasoned interrogator, knew exactly what to do in jail to turn the tables on his captors. It didn’t take long. After a brief period of interrogation, Cai convinced MND officers that he had defected and would help them. They allowed him to visit a certain phone booth in downtown Taipei, where he promised to take a call luring in his commanding officer. Despite being escorted through the streets by a large contingent of plainclothes officers, Cai was able to make a successful escape and vanish into the city nightlife.

A manhunt ensued over the following weeks, with counterintelligence officers spending their Chinese New Year holidays tracking down Cai. It was the year of the tiger, and they were hunting. The trail led them to his rural hometown of Changhua, in central Taiwan, where they finally found him. After being on the run for weeks, Cai was cold, destitute, filthy and homeless. His spy ring was broken and he had lost all his friends.

As dusk drew across the land, he was surrounded in a rice paddy. Armed counterintelligence officers circled and closed in. Seeing no way to escape, Cai's last reserves of courage evaporated and he gave himself up without a fight. Although he could have committed suicide, Cai still had too much to live for. He was desperately in love with a young girl who had been captured by counterintelligence officers.

March 1, 1950, was a pivotal date in the history of cross-Strait relations. That evening, after a long interrogation session, Mao's spymaster in Taiwan cracked under pressure and defected. He became a ROC military officer and, in return, gained his girlfriend's freedom, a huge sum of gold, and a high-ranking position in the military. To earn his generous reward, Cai fingered General Wu Shi and Agent Zhu Fengzhi, and revealed the identities of his other collaborators, exposing every major communist officer on the island.

Cai’s information allowed MND officers to make a clean sweep, clearing out enemy spy rings and underground cells across Taiwan. Life-shaking dramas played out quietly. In Taiwan and on the outer islands, PLA operatives were arrested as they filled out forms in government offices, lounged in military barracks, or attempted to cross military checkpoints.

Chairman Mao was oblivious to the tectonic shifts taking place underneath his feet. He found out when the ROC government went public with the round up, publishing front page newspaper pictures of Wu Shi, Zhu Fengzhi, and two other subordinate collaborators, both before and after they were executed in downtown Taipei by firing squad.

In total, eighty separate communist operations were neutralized and over 400 secret agents were arrested. The survivors fled the island and made desperate escapes back to mainland China. Cai’s once formidable intelligence apparatus on Taiwan had been thoroughly decimated, its demise guided by the hands of its own maker.     

The invasion of Taiwan was put on hold until Beijing could figure out what to do. In the end, Cai Xiaogan, the PLA spy turned double agent helped buy time for Chiang Kai-shek's emergency government. The outbreak of the Korean War did the rest. The history of cross-Strait relations would never be the same.

The standoff and the spy games across the Taiwan Strait continue to this day.

Ian Easton is a research fellow at the Project 2049 Institute and author of the new book, The Chinese Invasion Threat: Taiwan's Defense and American Strategy in Asia. This first appeared in October 2017.

Editor’s Note: The above draws from the author's new book, The Chinese Invasion Threat: Taiwan's Defense and American Strategy in Asia.

Image: Reuters

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