793.94/16718: Telegram
The Counselor of Embassy in China (Butrick) to the Secretary of State
[Received July 7—2:13 a.m.]
157. Two observers, one quoting a Chinese source close to the Japanese, have expressed opinion that the en bloc recognition of Nanking was engineered by Government [Germany] to the embarrassment of Japan while [who will, as a result thereof,] now have [less] freedom of action in seeking any desired peace negotiations with Chungking. Germany by this action shortly after Wang’s visit to Tokyo showed to the world (particularly the United States) the solidarity and strength of the Axis.
The same Chinese source informed one observer that Wang’s Tokyo reception did not meet his expectations and that of the three things he sought, namely, control of North China, a loan to offset the American loan to Chungking,21 and more power in China affairs, the first was denied him.
This source predicts that the Japanese are now convinced that the United States will have to be considered in any peace moves in China; that Japan will continue offensives against the Chinese Government during the summer and will consider new peace moves in the autumn through the medium of the Kuomintang (both Chungking and Nanking profess Kuomintang membership); in the meantime Japan will be guided entirely by expediency and European developments in the carrying out of her southward advance and possible action against Soviet Russia.
Sent to the Department; repeated to Chungking, Nanking, Shanghai. Code text by airmail to Tokyo.