The American opening toward Peking has turned Taiwan's intelligence agency from a trusted ally with no interest in spying inside the United States into a wounded, hostile force that "could carry out the same types of operations - paramilitary activities, sabotage and espionage - against United States persons and interest as now are targeted" against Peking, the Senate staff report concludes.

Intelligence reports on a meeting in Taipei in September 1971 of the three main Taiwanese intelligence organizations disclose that Taiwan began plotting a strategy to delay or, if possible, undermine the normalization of relations between Washington and Peking, in part by actively countering pro-Peking groups and individuals as they emerged here.

Considered and rejected at the 1971 meeting was a plan to send letter bombs to Peking's newly established liaison office in Washington. The lethal letters would also have been sent to Americans supporting Peking, particularly prominent academics who had made recent trips to China and then spoken in favor of recognition of that government. Prime Minister Chaing Ching-kuo vetoed the idea because of the probable political back-lash.

But the National Security Bureau did win approval to send an important operative, Mei K'o-wang, to Washington to take charge of all intelligence activities inside the United States and to prepare the network to go completely "underground" when the United States established diplomatic relations with China. Mei arrived in Washington in 1974 and worked under the cover of a New York-based business called the China Development Corp., according to intelligence sources interviewed for the Senate study.

U.S. intelligence reports show that the Taiwanese thought normalization was just around the corner in 1974. But they concluded with the fall of Saigon in April 1975 that they had at least three more years before President Ford (or his successor) would consider recognizing Peking. They set out to make maximum political use of that breathing space.

A new intelligence chief, Wang Hsilin, was dispatched to Washington and he attempted to launch a program to recruit Chinese-Americans to travel to China and then report what they learned to Taiwanese intelligence agents upon return. Agents were infiltrated into pro-Peking groups with instructions to disrupt their activities. Violent clashes occurred in demonstrations in San Francisco in May 1978.

At least 45 Taiwanese intelligence officers were present in the United States at the beginning of this year. Ten to 25 of them are believed to be on U.S. college campuses, where they engage in infiltration, surveilance and the organization of anti-Peking demonstrations. Four "well-known" Sino-American professors have reportedly been put on the payroll of the Intelligence Bureau of the Ministry of National Defense in Taipei.

U.S. investigators have identified an additional Taiwanese objective, but there is no information available on how successful the effort has been. It is to "develop assets in the United States government who might provide useful information" to Taiwan.