Summary
In January of 1951, the PRC began making offers of peace. The outreach was limited, China asked for a 7-power conference to be held on the issues of the fate of Korea and Formosa's, as well as on the question of a Chinese UN seat. The Americans, who considered the Chinese nationalists on Formosa to be the rightful government of China, did not want to give China a seat in the UN; the US rejected the PRC's offer for peace. Instead, at Truman's prompting, the UN censured the PRC for aggression.
On his own, MacArthur decided to go even further in antagonizing the Chinese. In March, without consulting Washington, he decided to send an ultimatum to the PRC. MacArthur demanded that the Chinese withdraw their troops. If they didn't, he promised to force China to its knees. Truman was incensed at MacArthur's rogue attempt to define and influence US policy; he decided MacArthur had to be fired. Truman did not act immediately, however, and as he waited, in early April of 1951, Congress approved NATO, a sign that Truman's Europe-first policy had been accepted. By this time the incident of the ultimatum had become worn-out, and Truman needed another reason to fire MacArthur.