893.00/14909: Telegram
The Ambassador in China (Gauss) to the Secretary of State
[Received December 13—2:05 p.m.]
1486. Embassy’s 1396, November 18 [28].70 Following is an evaluation of the work of the Tenth Plenary Session of the Central Executive [Page 261] Committee of the Kuomintang, based on reports and on subsequent conversations with Chinese officials:
The Central Executive Committee adopted some 20 resolutions, the most significant of which were concerned with party organization and work, military service, education, fiscal policy, industrial organization, labor service, reconstruction, local self-government, commodity price controls, and internal political solidarity.
The government spokesman selected for special emphasis (1) price control (he admits administrative deficiencies and popular skepticism, but states that Central Executive Committee was unanimous in determination to overcome difficulties); (2) furtherance of local self-government and reconstruction in line with Three People’s Principles and parallel with prosecution of war; (3) national solidarity (he states that liberal attitude adopted towards individuals and groups outside party creates opportunity for them to rally under same banner with Kuomintang), and (4) external policy (Central Executive Committee favored formulation of post-war policies during war and advocated immediate world organization among United Nations).
The manifesto of the sessions singled out for special mention (1) close relation of China’s regeneration to world rehabilitation and immediate need for world organization to enforce peace and to insure prevalence of Three People’s Principles with aim of saving not only China but world as well, (2) acceleration of China’s war effort as a present responsibility, (3) programs of local self-government and industrial construction as advocated by Dr. Sun Yat-sen for realization of two principles of the people’s sovereignty and the people’s livelihood, and (4) greater internal solidarity through recognition by all elements soundness Three People’s Principles, through discontinuance of discrimination and obstruction, and through respecting opportunity of all to serve country.
Informed Chinese officials emphasize the significance of (1) the work done to strengthen party control in local and national government, (2) the gesture made toward the Communists and other dissident elements in the national solidarity resolution, (3) the admission that China should accelerate its military effort, and (4) the desire evidenced to meet economic difficulties through price controls and improvement of fiscal policy.
In the Embassy’s opinion one of the principal objectives of the Kuomintang leaders at this time is the strengthening of party control and it appears that the December session bent its energies in that direction. Changes in Government officials (Embassy’s 1455, December 8, 3 p.m.71) indicates as much and discussions with regard to party affairs are understood to have emphasized that objective. Decisions [Page 262] and measures with regard to reconstruction, education, fiscal program, economic controls and external policy are in large part prompted and gauged by the desire to strengthen the party—are means to that end. The end of the party is to remain in power; it recognizes in the present shaky economic situation and in potential post-war developments a threat to that power. It follows the normal course of bureaucracies. It seeks to remedy defects in its own organization for control rather than to correct the basic defects in the social and economic structures.
The resolution on national solidarity came as a result of General Chiang’s remarks at one of the latter meetings of the CEC in which he pointed out that there was some criticism from abroad of the lack of political unity in China, that all elements should be given a chance to serve the nation and at the same time some liberty to express their opinions provided they obeyed the Government and did not create disturbances. Although the resolution was interpreted by many foreigners here as a threat to the Communists “to be good or else”, neither CEC nor Communist officials so interpret it. The former see in it generous gesture toward the dissident groups and the latter consider it an admission that the present is no time to precipitate civil war. It may be interpreted encouragingly as a step to arrest all deterioration of Kuomintang-Communist relations.
The resolution on fiscal policy advocates increased revenue, budgetary retrenchment, absorption of floating capital through sale of bonds, equity and simplification as guiding principles in imposing taxes, reformation of management of state enterprises in order that both the National Treasury and the public shall benefit, and reformation of local governments to enable them to become financially independent of the National Government. The resolution may be interpreted as critical of the Ministry of Finance but it is doubtful that the Ministry is prepared to do much toward meeting the criticism.
Renewed efforts at imposing economic controls envisage more centralized administration and stabilization of commodity prices on the basis of rice and salt prices. Some improvement in the situation is anticipated from these measures’ but fundamental correction, by reason [of] fiscal policy, is hardly possible due to administrative difficulties and the character of responsible government officials.
From the standpoint of military activity, little can be expected from the decision to accelerate China’s war effort. Besides being under-equipped, the mass of the soldiers is sadly undernourished and hence in no condition physically to engage in active military operations. There was talk of effecting a radical reduction in the size of the army and improving the lot and effectiveness of the remaining forces, but nothing came of it. Increased cost of feeding and clothing soldiers even with a present inadequate manner has actually brought [Page 263] about a reduction in the number of men in units but this reduction is not disclosed by commanders who fear reduction in their allowances.
Summing up, it may be said (1) that politically the high leadership of the Kuomintang has strengthened its control of the government and may be counted upon to continue cooperation with the United Nations, (2) that economically “stop gap” measures and an improvement in the fortunes of the United Nations will probably prevent a dangerous situation from deteriorating into collapse, and (3) that militarily the same type of resistance that has obtained for several years will continue with no reasonable expectation of offensive action. Five and one half years of war conditions have sapped China’s vitality and the present government is not competent to do much more than hold things together until peace. Whether it will be able to cope with the many and difficult problems that will face it then will depend in large measure upon the vision and ability of its leaders, neither of which is now conspicuous in the Kuomintang high bureaucracy. Much anticipatory dependence is being placed upon post-war aid and support from the United States and Britain, but it will require a strong determination to effect internal reforms if that aid and support is to be effective and unity and order are to be maintained.