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

No. 408

Sir: I have the honor to enclose a memorandum of conversation with Chou En-lai, official representative in Chungking of the Chinese Communist party. The conversation covered such matters as Chinese reaction to the recent allied defeat in Burma, the present condition of Communist forces, possible developments in the event of a Russo-Japanese war and the economic situation. With reference to Chou’s observations on the strong elements in the Kuomintang, the Embassy hopes in the near future to be able to submit a report on this matter,13 giving its estimate and evaluation of the character of the present Kuomintang leadership.

Respectfully yours,

C. E. Gauss

Memorandum of Conversation, by the Counselor of Embassy in China (Vincent)

I had an interesting and frank conversation yesterday with Chou En-lai, official representative in Chungking of the communist party.

His estimate of the reaction to and possible developments from the disintegration of resistance in Burma was in general conformity with the opinion I had previously formed based on conversations with other Chinese officials. He did not think that the Japanese had any intention of making a major drive toward Kunming from Burma. He interpreted the rapid motorization advance toward Paoshan as being primarily a foraging expedition. He felt that the Chinese forces in Yunnan would be able to cope with the situation.

He said that the defeat in Burma would have an adverse effect on morale primarily in official quarters but did not think it would be serious. Commodity speculators would no doubt take advantage of the situation further to boost prices and hoarding would increase [Page 198]somewhat. He considered, however, that these effects would be temporary. He estimated that the cessation of shipments into China from Burma would not directly affect the livelihood of ninety-five per cent of the people and would have little indirect effect. Curtailment of motor transportation facilities in an effort to conserve gasoline supplies would be the most widely felt result of the severance of communications with Burma.

I mentioned reports of Japanese peace overtures to the Chungking government. He said that he had not heard of them. He expressed confidence that General Chiang was determined to continue resistance and said that there were no elements in the government with sufficient strength and influence to initiate an appeasement policy although there were some elements that might be inclined to do so. I asked him what he considered the strongest elements in the Kuomintang under Chiang. He enumerated them as follows: (1) Tai Chi-tao, President of the Examination Yuan. Tai had been quite a liberal in the early days of the Kuomintang but with the passage of years had become very conservative. He now had a political philosophy closely bordering on paternalistic monarchy. Chiang thought highly of him and was attracted by his ideas. (2) Chen Li-fu, his brother, Chen Kuo-fu (the CC clique) and Chu Chia-hua (Chen is Minister of Education and Chu Chia-hua is Vice President of the Control Yuan). These men have a strong influence in educational and party personnel spheres. They are ultra-conservative and are strong exponents of party discipline and the strengthening of party influence among the people. Chu Chia-hua has fascist leanings and Chen is strongly imbued with ideas of a Chinese renaissance under close Kuomintang supervision. (3) Chang Chun, Chairman of Szechuan and confidant of General Chiang, and the so-called Political Science group of which he is a leading figure. The so-called “members” of the “group” are generally Chinese officials with a conservative Chinese outlook, with a certain antagonism towards what may be called the “returned student” (from England and America) element. Many of the high provincial officials and many returned students from Japan are adherents of the group. They are not pro-Japanese however. They are pro-Chinese with a strong feeling for Chinese institutions and ways of life. (4) The military leaders of which Ho Ying-chin, Hu Tsung-nan and Ch’en Cheng are the outstanding. General Ho, as minister of War and Chief of Staff, has a strong position in army administration. There is not the suspicion between General Ho and General Chiang that is mentioned at times. General Hu is in direct or indirect command of the largest, best trained and best equipped army in China—approximately 440,000 men. His command extends from Loyang in Honan, through Sian in Shensi, and then northward to Lanchow in Kansu. He has direct access to General Chiang but his relations with General Ho are on an easy basis. [Page 199]General Ch’en is commander of the important 6th War Area (Hupeh province) and is also very close to General Chiang. (5) The Soong family group. The antagonism between Kung and T. V. Soong weakens the group but Kung is dominant in the financial sphere and T. V. Soong is the strongest force in foreign relations. (6) Tai Li, who has various titles, but is actually head of the principal secret service organization in the country. He is close to General Chiang and exercises a strong influence through his extensive police organization said to number at least 40,000 men.

There are of course other elements but the foregoing constitute the strongest elements in the Kuomintang—the controlling elements. Chou said that none of them are animated by any well defined political philosophy or concepts. Their primary objective is to maintain the Kuomintang in control and, in so far as consistent with that objective, to increase their own influence within the Kuomintang.

Chou said that the “quarantine” of the Communist forces by Hu Tsung-nan’s armies continued to be very effective. I asked him what he thought would be the developments in the northwest area in the event of a Russo-Japanese war. He said that he did not anticipate an early outbreak of such hostilities. He expressed fear that, if they did occur, the Chinese Government forces would not take advantage of the situation to start offensive operations in the north. He said that the Communist forces, numbering about a half million men, would request the National Government for equipment to undertake such an offensive. If this request were refused (he thought it would be), request would be made for small arms and ammunition for active guerilla operations in the north and northeast. Upon the refusal of this request (which he considered likely) the Government would be asked to agree to the Communist forces receiving military supplies from Russia. He said that such a request would place the National Government in an embarrassing position because it would not wish to agree—would probably not agree—but would find it very difficult to explain its position to the other immediately interested United Nations.

Chou said that, while an attitude of “wait and see” might be advocated by some Chinese officials, he felt that there was little actual “defeatism” in China and that by and large there was confidence in victory over Japan. He said the economic-financial situation was the most serious problem in unoccupied China; that it did more to depress morale than anything else, and that the Government should actively and immediately concern itself with ameliorative measures. He is an advocate of increasing the production of agricultural and other consumption goods as rapidly as possible without special regard for cost. He suggests land reform and reclamation and full support of industrial cooperatives as means of accomplishing these ends.

John Carter Vincent
  1. Transmitted subsequently to the Department in despatch No. 553, July 30, p. 211.