893.00/14870: Telegram

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

954. 1. Wong Wen-hao, Minister of Economics, who returned last week from a special mission of a month’s duration in Sinkiang, has [Page 230] communicated the following information to Vincent in strictest confidence:

Sheng Shih-tsai, for the past 9 years chief of the Sinkiang Government which has been strongly under the Russian influence, has indicated his willingness to recognize the authority of the Chungking Government to subordinate the Provincial Government to the National Government and to permit the extension of Kuomintang influence to Sinkiang. Sheng has written a letter to Molotov confirming his allegiance to the Chungking Government. Informant is not yet aware of Russian reaction to Sheng’s volte-face but expresses concern over the situation in view of the strong position politically and economically which Russia has occupied in Sinkiang in late years. He states that Russian troops serving in Sinkiang forces under the Chinese flag are numerous especially at Tihwa where he spent several weeks and at Hami. He anticipates that extension of Chinese influence into Sinkiang is confronted with obstacles despite Sheng’s declared allegiance to Chungking.
Sheng is taking steps to eliminate Chinese Communist elements which in recent years have become strong in the Sinkiang Government. Informant states that Communist influence, which Sheng is undertaking to eradicate, is strong, open and highly placed in Sinkiang. It is Chinese with Russian support. In Kansu, he found that Communist influence was consequential but under cover, and was Chinese without Russian support.

The economic situation in Sinkiang is not unfavorable, although there is currency inflation—not so prominent as in China proper, but nevertheless obvious. The provincial currency is not tied to National Government currency. Ninety percent of Sinkiang’s export trade is with Russia. Russia has made extensive investments in the province. The oil fields have first class equipment owned by Russia. They are producing only twenty to thirty thousand gallons of gasoline monthly, but informant felt that production could be increased considerably. He is anxious (but recognizes the difficulty) that the Chinese Government gain control over the operation and production of the fields. (Embassy must request strict protection of the source of the information in the foregoing paragraphs.)

2. Chiang Kai-shek is reported to be in Lanchow now conferring with Sheng Shih-tsai.29a

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3. Service,30 Embassy Third Secretary now in Kansu, reports that recent replacement of General Ma Pu-ching’s forces in North Kansu by Central Government troops puts Chungking in position to apply direct military pressure on Sinkiang; that Chungking Government’s immediate objective is control and exploitation of Sinkiang resources principally oil and control of communications and that Chinese expect that their efforts to get a foothold in the province will be facilitated by Russo-Japanese hostilities.

4. It is not practicable now to make an appraisal of new course of events in northwest. It would appear obvious that Chinese Government is taking advantage of situation in Russia to extend its influence into Sinkiang at Russian expense. Politically it is of course operating within its rights. What will be reaction of inhabitants, majority of whom are not Chinese but Turks and distrustful of Chinese, if [is] question for future. They would not unaided be able to resist Chinese but given Russian support they might become formidable obstacle to Chinese plans. They do not seem to have suffered from Russian influence of recent years and it is far from certain that Russians are in fact prepared to accept designed consequences of Sheng’s transference of allegiance although they may find it necessary and politic in present circumstances to refrain from open opposition.

  1. In telegram No. 982, August 29, 10 a.m., p. 146, Ambassador Gauss reported in part: “Generalissimo is still in Lanchow. Unconfirmed reports indicate that Sheng Shih-tsai, Chairman of the Sinkiang Government, is to be replaced by General Ho Yao-tsu, at present Aide-de-camp to the Generalissimo, that National Government troops from Hu Tsung-nan’s command are already moving into Sinkiang; and that Sheng is to receive some nominal position, such as pacification commissioner for certain northwest provinces or may be summarily cashiered”. (740.0011 Pacific War/2777)
  2. John Stewart Service.