I believe a clarification of FEC's & CIA's intelligence roles during the early days of the Korean War is in order:Marc, >>And, in any event, the capture of Chinese troops in late November was reported by X Corps and FEC to Washington. Washington instructed FEC to ignore these captures, as the Washington spin was that these were merely "advisors" or "observers". And FEC was, of course, required to rely upon the IPB prepared by the CIA under the doctrine of the era, a mistake later repeated in Viet-Nam.<<
When the war began, there was a mad scramble by FEC and the Agency to get their intelligence gathering operations running, and while doing so more-or-less went their seperate ways. The Agency set up its main base in Japan at Atsugi AFB and at Pusan in Korea while FEC quickly reactivated KLO and expanded its CIC positive intelligence gathering operations in Korea. A few weeks after the war began, FEC established the "Far East Command Intelligence Coordinating Committee" (which in Nov 1950 became the Far East Command Liaison Group, 8240th AU) under FEC G-2 (Willoughby.)
The FECICC was made of intelligence representatives from the Army, Navy, Air Force and, reluctently, a liaison officer from the CIA. It was under complete (repeat complete) control of FEC G-2, not the CIA as some have suggested. CIA influence did not become major part of the equation until after MacArthur was relieved. Until then the CIA set up and ran its own operations more or less independent of the military. Needless to say this led to considerable friction between the Agency and FEC G2 in the early days.This was the situation when, in October 1950, US/UN troops advancing into North Korea began picking up Chinese POW's and reporting their capture/interrogation results to FEC. Almost every field unit S-2/G-2 in Korea concluded the Chinese were, at best, preparing to fight a delaying action to allow what remained of the North Korean Army/Government to escape into Manchuria or, at worst, to intervene in force. Available information is Willoughby accepted the former as the "worst case scenario" and decided the Chinese being picked up were simply "support" personnel helping the NKPA get out of North Korea, while totally dismissing the possibility of massive Chinese intervention. And this is what he told MacArthur and what went forward to the JCS in Washington.