The Ambassador in Japan (Grew) to the Secretary of State

No. 426

Sir: While the Japanese public in general received the news of the military truce between the Japanese and Chinese forces in North China with satisfaction, believing that it presaged a return of friendly relations and a revival of trade with China, certain sections of opinion, as expressed by official spokesmen and reflected in the press, seem inclined to doubt the sincerity of the Chinese motives and appear uncertain as to the outcome of the political situation in [Page 358] North China. Thus the Foreign Office statement, issued after the conclusion of the truce, states (Japan Advertiser translation):

“If China makes a new start on the conclusion of this truce and endeavors to restore peace and order in the country, it will be able to escape from the present disagreeable conditions and establish a foundation for the welfare of the nation. Hoping the responsible persons in China, especially North China, will not take a mistaken course, we will watch over developments in the situation.”

The War Office statement, as translated by the Japan Times and Mail, after recounting the history of the truce negotiations and reiterating Japan’s desire to secure peace along the borders of “Manchukuo”, states:

“The War Office will calmly watch future developments in North China. We will take a friendly attitude to those who strictly control anti-Japanese activities, but if anyone violates the truce, we intend to make our troops stationed at Peiping and Tientsin take drastic measures.”

[Here follows report of Japanese press views.]

Financial, industrial and commercial circles in Japan appear to be relieved by the truce. They are optimistic regarding a revival of trade with China, and they hope that China will not now increase tariffs on Japanese goods or impose anti-dumping duties on imports. It is reported that the Osaka Chamber of Commerce and Industry has petitioned the Foreign and War Offices in regard to future negotiations with China, asking that Japan endeavor to secure the abolition of tariff increases, anti-dumping duties, trade boycotts, and regulations requiring the marking of goods with the name of the country of origin.

In view of the indecisive character of the Japanese activities of the moment, both military and political, in North China, in Tokyo foreign observers of the situation are somewhat puzzled as to Japan’s immediate objective. It is evident that any dreams which may have existed of placing Pu Yi on the Dragon Throne in Peiping have been dissipated. Trial balloons sent up to test the reaction to this idea some months ago failed to arouse any enthusiasm in North China or in Occidental countries. The prompt action of Chiang Kai-shek in taking over the government of North China after the abdication of Chang Hsueh-liang forestalled any plans which may have existed for the immediate installation of an independent government friendly to Japan in that region. The consensus of opinion among foreign observers in Tokyo now is that the Japanese authorities are adopting a simple policy of opportunism; that they will wait for further developments, with the hope that a government, independent or semi-independent of Nanking and amenable to Japan’s [Page 359] wishes in regard to “Manchukuo”, will evolve from the political chaos of North China. It is possible, according to these observers, that the Japanese intend to assist any faction which may arise and exhibit a friendly attitude toward Japan.

The principal Japanese objective, of course, is to compel or induce any government in authority in North China to consent to the present status of “Manchukuo” and to Japan’s position in Manchuria, and the Japanese are prepared to deal with Nanking or with any other government, whether or not subordinate to Nanking, which will offer a possibility of accomplishing this purpose.

Respectfully yours,

Joseph C. Grew