The Second Secretary of Embassy in China (Stevens) to the Ambassador in China (Hurley)6
Sir: Since assuming charge of this office on August 15, I have endeavored to acquire as much information as I could regarding the Chinese Communist situation in these parts and to the north of here. I have the honor, therefore, to report as follows on recent developments in Kuomintang–Communist relations:
Despite rumors to the contrary, the Communist threat to the Sian area is still potential though not entirely dormant. There is much local talk concerning it but few factual developments determining the extent of its seriousness. The clashes which occurred at Chunhwa in mid-July and were of doubtful Communist origin did not develop to serious proportions before the restoration of order at that place, nor have there since been good evidence of alarming preparations being made by either the Nationalists or the Communists to detract [Page 447] from the localized aspect of the Chunhwa incident. On the other hand, it is possible that significance should attach to the following statement made in my presence yesterday by General Teng Pao-shan, Vice Commander-in-Chief under General Fu Tso-yi of the Twelfth War Area. While on the subject of the Chunhwa incident General Teng described it as being “too premature to fit in with Communist plans, the full application of which can well afford to wait until Soviet support is assured or until the rancor of the masses against the Kuomintang rises, as it surely must rise, when the Nationalist Government fails to convene on November 12 a truly representative National Assembly.”
Mao Tze-tung, it would appear, did not definitely reject the invitation which he reportedly received recently to resume discussions in Chungking. According to General Teng, whose headquarters are at Yulin, Shensi, and who functions as Nationalist liaison officer near the government at Yenan, Mao Tze-tung stated that had be received a “proper” invitation from the Chungking authorities he would have declined because he knew that the Generalissimo had nothing new to offer and it would be a waste of time to carry on discussions with minor satellites of the Kuomintang oligarchy. Mao was quoted as having said that he would be glad to carry on discussions in Yenan with any properly authorized representative of the Generalissimo.
Communist forces in Shansi, according to local OWI6a intelligence reports, have and are continuing to take over and retain for their own use arms and military supplies abandoned or surrendered by the Japanese, and this notwithstanding orders of the central government to the contrary. Uneasiness has been expressed in various circles at Sian that such defiance on the part of the Communists not only shows that faction’s lack of appreciation for Allied assistance in liberating the homeland from Japanese domination, but also its unpatriotic determination to arm for civil war which, if it occurs, would bring economic ruin and further untold suffering to millions of Chinese people.