793.94/6969
Memorandum by the Second Secretary of Legation in China (Vincent)8
It is my opinion that Mr. Mennie’s9 analysis of the situation is near enough the mark to merit consideration.
There are believed to be three desiderata impelling Japanese policy (or ambition) toward China at the present time. They are (1) increased [Page 112] Chinese imports of Japanese goods, (2) an understanding with China providing nominally for cooperation between the two countries but actually recognizing Japan as the arbiter of affairs in the Far East, and (3) formation of a cordon sanitaire in the north which will effectively prevent contact between China and Russia through Mongolia.
The first of these desires has been partially realized with the virtual cessation of the boycott and may be accomplished further through revision of the Chinese import tariff and through Japanese investment in China of a character which will create a demand for Japanese goods. Japan is not now primarily interested in investment in China for the sake of putting capital to work, liquid Japanese capital not being sufficient to warrant this, nor for obtaining Chinese raw materials. Of the four commodities—petroleum, wool, iron, and cotton—comprising about two-thirds of Japan’s imports, only cotton can be obtained from China in large quantities and the quality of this cotton must be greatly improved before it will be suitable for Japanese cotton mills. The promotion of trade and strategical security will be the motives prompting any Japanese investment in China for the present.
As Mr. Mennie states, an understanding with China which may be construed as approval of the Amau statement of April, 1934, will greatly strengthen Japan in dealing with the Western Powers in matters pertaining to China. Further, such an understanding, if sincerely observed by the Chinese, would allow the Japanese to view the possibility of a conflict with Russia with much less concern than they now do, and would permit them more freedom to prepare for the eventual extension and increase of their influence in the Netherlands India and Malay States area.
The desire for a buffer state or autonomous area under Japanese control between China and Russia is, as Mr. Mennie points out, contingent upon the failure to reach an understanding with China which can be relied upon. The Japanese, certainly the liberals, prefer an understanding. The military want both, but at the present time are probably prepared to be satisfied with one or the other.