Japan did not cede sovereignty over Formosa and the Pescadores to China. Japan renounced its own sovereignty but left the future title undefined. As principal victor over Japan, the United States has an unsatisfied interest in these former Japanese islands.
Report: The Secretary of State to the National Security Council
Date: October 28, 1954
Subject: US policies in relation to China
. . . In this connection it may be noted that Japan never ceded sovereignty over Formosa and the Pescadores to China. Japan renounced its own sovereignty but left the future title undefined. Thus the United States as principal victor of Japan has an unsatisfied interest in these former Japanese islands.
[ source: United States Department of State / Foreign relations of the United States, 1952-1954. China and Japan Volume XIV, Part 1 (1952-1954), page 811 ]
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