Foreign Relations of the United States: Diplomatic Papers, 1945, The Far East, China, Volume VII

740.0011 P.W./2–2845

Report by the Second Secretary of Embassy in China (Service)⁷⁹

No. 6

[ Chungking ,] February 23, 1945.

Summary. A plan has been initiated by Chinese capitalists in Shanghai, approved by a Chinese official in Chungking, and passed to the British for consideration, whereby Shanghai will be declared an “open city” if all Allied military activity in the area is prohibited. Ostensibly designed to save Shanghai from being “scorched” by the Japanese, the plan will work in favor of the Japanese and greatly hamper any military operations by us to capture and use this important base. The plan is actually a type of “peace feeler” and is definitely a preliminary to further compromising attempts to preserve Chinese and Japanese economic interests in occupied China, to bring about peaceful fusion of Central and puppet administrations, and to forestall Communist attempts to gain control. It will be a serious mistake for us to agree to any such proposal. Detailed comment follows. End of Summary.

1. The attached document⁸⁰ is a copy of a letter from an officer of General Wang Peng-sheng’s intelligence organization—reputedly directly under the Generalissimo—to an officer of the British Embassy (and Intelligence Service). It quotes and approves a plan contained in a telegram from a Mr. Chang Tzu-yu in Shanghai to make that place an “open city” to be “centered around former Foreign Settlements and Concessions.” The British, whose “consideration” was asked, have passed it to us confidentially.

2. This proposal is of great interest as an indication of the situation we will confront as the war in China draws close to the large Japanese-occupied cities.

a. Both puppet and Central Government Chinese are desperately anxious to avoid warfare which may destroy their main economic centers, where many of them personally are heavy property owners and where many of their families and relatives still reside. They wish to have a peaceful, arranged turn-over of authority, which can bridge the gap between Japanese-puppet administration and full Central Government control and rob the Communists of the excuse or opportunity for the active role which the Communists plan to take in the “liberation” of these cities.

b. In addition to the immense military usefulness of these cities to the Japanese, there are large Japanese populations and huge economic interests which the Japanese hope to protect and preserve. The Japanese also fear left-wing movements and, with the loss of the war certain, are sure to try to salvage all they can by any feasible compromise with the conservative groups in China—puppet and Central Government. The threat to carry on a desperate “last ditch” struggle in China and to destroy these cities, is thus being used by the Japanese as a potent form of psychological warfare.

c. In the attempt to keep the war away from these cities, there is therefore a community of interest between the Central Government, Puppets and Japanese. The cat is let out of the bag in the final sentence of the first paragraph: “…⁸¹ all possible must be done to prevent Shanghai being destroyed by a Japanese ‘scorched earth’ policy or by an Allied offensive in that area.” With its military usefulness to them, and their large economic interests in Shanghai, the Japanese will be very glad to trade their threat of a “scorched earth” for the Allied promise to refrain from an offensive in that area.

d. It is clear that if this proposal succeeds, either in its present or a modified form, it will become the pattern of attempts to have other large cities protected in a similar manner. As far as the Chinese are concerned, they will be glad to have the whole of occupied China declared an “open city”.

3. Since only the Japanese can declare Shanghai an “open city”, the proposers can hardly be so naive as to have failed to at least consult with the Japanese. Certainly the plan favors the Japanese.

a. Offers to release internees and POWs mean little because most of them are not kept in Shanghai.

b. It is not specified that the Japanese will be denied transit privileges and use of the harbor and adjacent railway facilities. On the contrary, “free entry and exit … is to be recognized.”

c. Most of the Japanese industries will apparently be permitted to continue since, as Shanghai is chiefly a light industrial center, it can be argued that they are not strictly military. It is evident that no interference with Japanese properties is intended since the author of the proposal is “of the opinion that this … will meet with success for the simple reason that many important Japanese personalities own extensive properties in Shanghai.” It is probable, in any event, that most of these have already, or will before the end of the war, been placed under nominal Chinese control.

d. Although it is stated that Japanese and puppet police will be withdrawn and military activity cease, it is difficult to see how the governing committee will “form and maintain a local defence corps” except by putting puppet troops in new uniforms.

e. In return for these empty concessions, which preserve Japanese and Chinese interests and do not deny Shanghai’s usefulness to the Japanese, we are to refrain from “an Allied offensive in the area”, give “a guarantee that all Allied guerrilla units will cease activities in the area concerned”, and “prohibit the landing of troops and air attacks on the ‘open city’ area”. According to this, even clandestine activities would have to cease, since these are usually claimed by Chinese as “guerrilla”.

4. Other problems are raised.

a. The men suggested as the governing committee are probably not open puppets. But most of them should certainly be classed as “collaborators”. The records of some, such as Yuan Liang, a former Japanese nominee as Mayor of Peiping, are not good.

b. If Shanghai is made an “open city”, it will be jammed with refugees. The food problem in Shanghai is already serious. We can be sure that the Japanese will not take on the added responsibility. And the Chinese will be unable to.

5. The list of alleged “advantages” for the plan is worthy of some comment.

a. Should read: “Protect the property of Chinese and Japanese financiers and industrialists”.

b. We are not interested in neutral investments and Allied investments are small in comparison to Japanese. They are less than one day’s cost of the war.

c. This will result in the release of very few Allied POWs.

d. The “banditry” referred to will probably be, in large part at least, the activity of the Communists.

e. The attempt to “test Soviet policy toward Japan” is obscure. But it is something which we will be wise to avoid being involved with.

f. The influx of large numbers of refugees will bring a request for us to find some way to feed them: it is hard to see how it will dishearten the Japanese troops.

g. The “Japanese politicians and antiwar elements” who take “haven” in Shanghai will certainly be there with the permission of the Japanese. Shanghai will be a center of negotiation and compromise and the Chinese are glad to be the appeasing middlemen.

6. In addition to all of its obviously unfavorable aspects, we should recognize that the plan is unrealistic because of the certainty of independent Communist action. Communist guerrillas in unknown strength surround Shanghai. They claim to have an extensively organized underground within the city, especially among the industrial and dock workers. They openly talk of the united effort of these forces to liberate Shanghai from without and within. The liberation of Paris is their model. Shanghai is the biggest plum the Communists can get. They had it once in 1927, through a similar organization of workers (by Chou En-lai). This time nothing is going to stop them from making the attempt. They will recognize any such plan as this as being aimed in large part against them. They are therefore sure to continue and intensify their guerrilla and underground activity. The result will be disturbances which will cancel the whole scheme by requiring Japanese and puppet counter-measures and continuing Japanese occupation.

7. There are some interesting parallels between this proposal and a part of the Communist allegations of recent exchanges between Shanghai and Chungking. Both originate from a man named Chang. Both speak of Chang sending a representative to Chungking to open a channel of communications. Both are aimed at the peaceful transfer of Japanese interests in Shanghai and the protection of the city from war. This communication—from a Chinese official—is the best possible confirmation that attempts to seek compromise are being made.

8. It is also interesting that the proposal was submitted to the British rather than to us. We, rather than the British, are militarily concerned in the China Theater. But British economic interests in Shanghai are greater than ours (though now less than the Japanese); the British fear the rise of “Communism” in China; and they are likely to favor an arranged peace in China which may permit fusion of the puppet and Central Government. Finally, many British, like General Wang Peng-sheng, favor a soft peace toward Japan. One can only draw the conclusion that the Chinese sensed that we would not approve the plan so hoped first to get British support before approaching us.

9. If the Chinese expected our disapproval, they are right. We cannot take action in regard to this specific proposal since we have learned of it only confidentially through the British. But we should take any opportunity to make clear our intention of attacking the enemy wherever he is. And we should keep a close watch for other peace feelers of this type which are sure to follow.

John S. Service

79. Copy transmitted to the Department by the Chargé in China in his despatch No. 189, February 28; received March 17. The despatch stated: “The Embassy concurs in Mr. Service’s comments regarding the plan.”
80. Not printed.
81. Omissions indicated in the original report.