893.00/13627: Telegram
The Counselor of Embassy in China ( Peck ) to the Secretary of State
[Received 3:15 p.m.]
229. 1. An important official of the Chinese Government questioned by me today said that the Chinese Government has no doubt whatever that Japanese assistance was given to Kwangsi in opposing the Government in the form of supplies of money and arms but the Government [Page 248] has good reason to believe that even the Japanese military faction now believes this step was unwise because of the popular anti-Japanese sentiment which has been stimulated. It appears that the original slogan of the Southwest was to have been “down with Chiang Kai-shek” and it was Pai Chung Hsi who insisted on the anti-Japanese pretext. In granting their consent to this the Japanese had first received Pai’s assurance that the anti-Japanese aspect would not be unduly stressed, the safety of all Japanese nationals would be guaranteed, and the boycott would not be revived.
2. The Government hopes that because of continued defections of Chen Chi Tang’s troops, Yu Han Mou will be able to effect speedy conquest of Kwangtung and if the assistance lent by Kwangsi troops to Kwangtung makes this unlikely, the Government is prepared to threaten Kwangsi from Kweichow in order to compel withdrawal of Kwangsi troops from Kwangtung. Informant doubted whether Chen Chi Tang is acting in response either to threats or bribes from Japan and said that thorough investigations failed to show any Soviet assistance extended to the Kwangsi leaders. Informant did not believe that the Nineteenth Route Army would constitute a serious military factor and doubted whether its important leaders had actually gone to Canton.
3. Informant said that relations with Japan are almost ominously quiet. The new Ambassador has advanced only generalities in regard to economic cooperation without specific proposals. The Chinese Government fears that if the fighting with the Southwest is unduly protracted the Japanese will take some step of aggression against Shantung where they are attempting to play upon the discontented feelings of Han Fu Chu. Han is anxious to replace Admiral Shen, present Mayor of Tsingtau, with his own appointee but the Government is attempting to retain Shen because of his proved loyalty in the face of threats and inducements from the Japanese Government to induce fullest compliance with Japanese plans for expansion in Tsingtau.
4. About July 24 Chiang Kai-shek and all Cabinet Ministers will remove to Kuling for about 6 weeks. Ministers of Finance and Foreign Affairs will, however, alternate with their senior Vice Ministers.
5. Repeated to Department, Peiping, Canton, Hankow. By mail to Shanghai.