793.94/7847: Telegram

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

191. Embassy’s 168, April 3, noon.

Major General Matsumuro established his office at Peiping on April 10. The Japanese Embassy now states that this office is under the North China Garrison and not under the Tokyo General Staff. Matsumuro and Sung Che Yuan are in Tientsin.
Sung apparently continues his policy of procrastinating to the greatest degree possible in meeting Japanese desires. Sung’s purpose is evidently to maintain his present status quo as long as possible.
Preparations for inauguration of reconstruction and communications committees under the Hopei-Chahar Political Council are being made slowly but the dates of inauguration have not yet been fixed. It is understood that the Japanese military hope that these committees will accelerate Sino-Japanese economic cooperation. It is doubtful, however, whether much can be expected of the committees for the reasons that the committees will probably procrastinate and that neither Chinese nor Japanese capital seems to be available at present for effective support of significant project.
The Economic Committee of the Council decided on March 21 to urge the Ministry of Railways at Nanking to issue a permit for the construction of a private narrow gauge railway from Kalgan to Dolonor and referred to economic advisers for study a proposal for readjustment of the Lungyen iron mine in Chahar. The action of General Sung’s regime in respect to these projects in which the Japanese are interested illustrates that regime’s methods of attempting simultaneously to please the Japanese and to delay.
Notwithstanding the situation described above, there is evidence of a steady Japanese economic and social penetration into Hopei and Chahar, such as (1) the continued smuggling of Japanese produce into China through Yin Ju Keng’s area, (2) expanding trade by Japanese and Koreans in Hopei in opium and other narcotics, which is being extended to towns in Chahar and Suiyuan Provinces, according to foreigners resident there, (3) establishment of Japanese owned bus lines in northern Hopei, (4) activities for improvement of cotton production, [Page 112] (5) establishment of various Japanese investigation organs and (6) intended improvement of the Peiping-Mukden Railway installation at Shanhaikwan at a reputed cost of $600,000 (Chinese currency).
The attitude of the Chinese military leaders in North China indicates that the Japanese will be unable to effect the establishment of a regime of the degree of autonomy and geographical scope which they presumably still desire unless they are ready to threaten the Chinese leaders with the use of armed force or to run the risk of using armed force.
According to a competent press correspondent who has just visited Kalgan and Kueihwa, the foreign residents of those provinces do not expect a forward movement into Suiyuan by Japanese controlled Mongols of Chahar for some time.

By mail to Tokyo.