893.00/15338
Memorandum by the Second Secretary of Embassy in China (Service)98
To: Assistant Chief of Staff, G–2.
The following is supposed to be the gist of remarks made by the Generalissimo at the latest meeting of his “inner council”. The source has been good in the past. Suggested rating B–3.
- 1.
- The British feel that they lost out badly at both Cairo and Teheran. They are therefore trying to recoup their position. British-American and British-Soviet relations are not likely to be improved or cooperation made better.
- 2.
- Japan, facing the certainty of increasing pressure from America and Britain, is sure to carry out a large scale campaign to put China out of the war. They will hope to accomplish this by (1) the opening of the Canton–Hankow railway, and (2) the capture of Chungking. The Japanese will hope that by thus eliminating China and entrenching themselves in China, they can so prolong the war that Britain and America will tire and agree to a negotiated peace. This Japanese drive will come this year.
- 3.
- China can meet this drive but the greatest danger is of economic collapse. The budget for the present year, increased largely by huge expenditures on airfield construction for the American Army, will equal the total of the national budget for the past six years. (Kung is quoted by several other sources as saying that it takes CN$1,000,000 to feed 8 American soldiers for a year.) Great as these expenditures for the American Army are, we should not grudge them. For if China is lost, and America has to beat Japan from other bases, the additional cost to the American taxpayers will be billions of American dollars. But the economic situation is very serious and means must be found for dealing with it. This year will be China’s toughest.
- 4.
- The importation of American currency for the American troops is not an important factor in the situation. And since these troops are risking their lives in fighting for China, it would be improper for us to make objection. (Dr. Kung has also been reported to have expressed similar opinions.)
- 5.
- The press trip to Yenan will leave in the near future. It is planned that they will have an opportunity of seeing the real conditions in the Communist area and of comparing them with our reconstruction activities in other parts of the Northwest. For this reason the trip will take several months. It is hoped that this will have some effect in meeting foreign criticism.
- 6.
- We must attempt to settle the Communist problem by political means. I asked Chou En-lai and Chu Teh99 to come to Chungking to discuss matters. Now it appears that only Lin Pai-hsu is coming first. It is not likely that the Communists will agree to give up their separate government and army. But we must continue our efforts. It is hoped that a branch of Central News can be established at Yenan.
- 7.
- American public opinion toward China is becoming increasingly critical. (The same source stated that the texts of numerous critical articles in publications such as Amerasia had recently been sent from the U. S. These are circulated to some high government officials but are not published.) We must do everything possible to improve American opinion. If we have a failing, we must correct it.
- According to the informant, the meeting ended with the Generalissimo asking: “What exactly is wrong with China that the Americans do not like?” No one tried to make an answer.
China is in a mess. No military action on a significant scale is in sight. The economic crisis continues to drift and worsen. Internal unrest is active and growing. Relations with all her allies are estranged.
[Page 39]China (the Gov’t) is still Chiang Kai-shek. Although we may have to deal with others—H. H. Kung or Ho Ying-chin1—we must recognize them as substantially only yes-men.
We are, it is true, partially to blame for adding to China’s economic problems. But for the sorry situation as a whole Chiang, and only Chiang is responsible.
That under these serious circumstances Chiang should be acting as he is seems incredible. Instead of all-out cooperation to win the war, we meet with “active non-cooperation”. Military commitments are not being fulfilled. Construction projects are delayed. Vital financial negotiations make little progress. The simple request for observers to obtain military intelligence from Communist North China is refused.
Yet Chiang knows that we are going to win this war, and that his destiny is linked to us. He is completely dependent on the United States—in foreign relations, militarily and economically. Even his internal position would be endangered if American support were withdrawn.
The answer to the apparent enigma lies in Chiang’s background and limitations, and in our failings in dealing with him.
. . . . . . . . . . . . . .
Thus the recurrent alarms of new Japanese threats, the cries of imminent economic collapse (unfortunately with a foundation of truth, but about which he does nothing constructive), and the repeated demands for loans and other aid on an unreasonable scale.
Thus also the difficulty in dealing with Chiang and in getting delivery on promises. The words of the Ambassador carry little weight—because the State Department has not taken a strong policy and because it does not, in any event, speak for the White House. He does not fear General Stilwell—because the General cannot demonstrate the unqualified backing of the War Department, or the White House.
Chiang will cooperate if the United States, upon which he is dependent, makes up its mind exactly what it wants from him and then gets hard-boiled about it. Until the President determines our policy, decides our requirements, and makes these clearly and unmistakably known to Chiang, Chiang will continue in his present ways.
The President can do this directly or through fully authorized and completely supported representatives. These might be the Ambassador and General Stilwell acting in close concert.
This may mean taking an active part in Chinese affairs. But unless we do it, China will not be of much use as an ally. And, in doing it, we may save China.