The Minister in China (Johnson) to the Secretary of State

No. 2828

Sir: I have the honor to refer to my telegram No. 11 of January 5, 1934, 1 p.m.,49 reviewing political developments which occurred in China during 1933, and to submit a similar review of developments during the first six months of 1934.

The outstanding problems confronting the Central Government during the first six months of 1934 were (1) relations with Japan; (2) relations with the Southwest; and (3) the campaign against the Kiangsi communist forces.

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The principal events of this period were (1) the return to China of Marshal Chang Hsueh-liang (January) and his appointment to a post in Central China under General Chiang Kai-shek (February); (2) suppression of rebellion in Fukien Province (January); (3) rebellion in the Northwest of General Sun Tien-ying (January) and its suppression (March); (4) transfer of more than 100,000 of Marshal Chang Hsueh-liang’s troops from North to Central China (March to June); (5) initiation by General Chiang of the “New Life Movement” (March); (6) inauguration of an “autonomous” government in Inner Mongolia (Chahar and Suiyuan Provinces) (April); (7) departure from Peiping of General Huang Fu, Chief of the Peiping Political Affairs Readjustment Committee, and his conference with General Chiang Kai-shek and Dr. Wang Ching-wei (April); (8) conference of leaders of the Southwest with representatives of the Central Government (June);and (9) announcement of agreement with Japan to reestablish on July 1st through passenger traffic on the Peiping-Mukden Railway (June).

During these six months the fundamentals of China’s political and economic situation have not altered. As previously, however, there were developments indicating a growing understanding on the part of some of the country’s leaders of its needs. But until there is evidence that these leaders intend effectively to implement this understanding with action, there will be little reason to view the present situation in China with other than pessimism. It might also be recalled that the masses were subjected during the years 1925 to 1929 by the leaders of the Kuomintang to a pleasant stream of propaganda to the effect that they, the people, were unconquerable and that they, with the help of the Kuomintang, would get back all rights and privileges lost by treaty in previous years. The result of this is that now it is well nigh impossible for any leader to turn the thoughts of the people in other directions, no matter how much the leader may understand the needs of the country. Nor are the leaders of China of a calibre to admit the failure of the Kuomintang program of those years.

I. Military and Political developments:

General Chiang Kai-shek has continued to consolidate his position as the dominant military figure, directing at the same time the chief political, economic, and financial activities of the Central Government. His prestige, enhanced at the expense of the debilitated Kuomintang, was indicated by the perfunctory progress of the Fourth Plenary Session of the Central Executive Committee of the Kuomintang (in January), and was primarily due to his unexpectedly rapid suppression, early in the year, of the rebellion in Fukien Province, which had a salutary effect not only on politicians but also on those of China’s [Page 219] military satraps who are antagonistic to him. His authority in provinces other than some of the provinces of the Yangtze Valley continued to be merely nominal, with the exception of Fukien Province through which his control was extended to the northeast border of Kwangtung Province. Military leaders in those areas of nominal control, however, seemed less inclined to risk a frontal clash with him and more disposed to enter into discussions of problems either with General Chiang direct or with his representatives. A number of military leaders in North China journeyed to Central China to confer with him and, in the latter part of June, conferences were held in the Southwest between militarists of that area and representatives of General Chiang. This increasingly cooperative attitude was due, it may be presumed, primarily to realization on the part of these semi independent militarists that their selfish ambitions could not be successfully promoted in the face of Japan’s menace both to North and to South China. But there was little reason to believe that, with the arrival of a moment regarded as propitious, the ambition of these generals and their jealousy of General Chiang might not again take form in action against him. The more conciliatory attitude on the part of the Southwest was reported to have resulted in a promise of cooperation against the communist forces in Kiangsi and Fukien Provinces, a cooperation which would seem to be necessary if this longcontinuing campaign is to be successfully concluded. In outlying areas, the ineffective direction and the tenuous control of affairs by the Central Government remained the same, with the possible exception of Inner Mongolia (Chahar and Suiyuan Provinces) where a so-called autonomous government was established, an innovation which cannot yet be evaluated.

II. Economic and financial developments:

Little relief was extended to the masses of China suffering from excessive taxation, the cupidity and dishonesty of military and civilian officials, the exploitation of the people as a market for opium, and continued neglect of measures to overcome such natural disadvantages as flood, aridity, and difficult communication. Until such fundamental ills are remedied, the loyalty of the people to the governing classes, approval of their activities, and the removal of the danger of subversive movements cannot be anticipated.

There were indications once more that at least some of the officials realized the need of reforms, but those reforms which they initiated continued in an elementary stage; and their significance depended upon future developments. They included the Second National Finance Conference, which passed resolutions looking toward reform of taxation; General Chiang’s “New Life Movement”, which places more emphasis upon the evils of tobacco than on the evil of opium; some [Page 220] work on roads, sanitation, and irrigation; the establishment of the China Development Finance Corporation for the purpose of organized economic development of China; and some discussion of ways to develop the Northwest. In no instance was there assurance that these reforms would be implemented with action of substantial significance.

III. Foreign Relations:

Japan: During this period it became evident that further aggression by the Japanese military was at least in abeyance pending the outcome of Japan’s efforts to obtain its ends in China by “diplomacy”. Although these aims were not definitely known, they were believed to include economic and financial expansion in North China, which would eventuate in political dominance, improved trade conditions with China as a whole, and preeminence (at least) among foreign powers in extending “assistance” to this country. The announcement, without serious repercussion, of agreement for the resumption of through passenger traffic on the Peiping-Mukden Railway, indicated the acquiescence of China’s leaders to the policy of procrastinating in conceding to Japan’s demands to a point just short of precipitating action by the Japanese military, while at the same time efforts should be made to build up China’s powers of resistance. In the relations of General Chiang with other ambitious military leaders, described above, it was evident, perhaps for the first time, that at least some of the militarists deemed it expedient to defer their personal ambitions to the Japanese menace.
Western nations: The question uppermost in the minds of Western observers during the period under review has been whether China would not turn less and less to Western nations for aid in economic (and military) restoration in view of Japan’s increasingly frank disapproval of such cooperation. Certainly the general attitude of the Chinese during the first half of the year in their relations with Western powers has been less intransigeant than usual as a result of the Japanese threat.

Respectfully yours,

Nelson Trusler Johnson