740.0011 PW (Peace)/10–2847
The Acting Political Adviser in Japan (Sebald) to the Deputy Director of the Office of Far Eastern Affairs (Penfield)76
Dear Jim: General MacArthur told me that he had a two-hour talk with Dr. Wang Shih-Chieh on October 24 and gave me the highlights of his conversation as set forth below. He said that the discussion centered about three points, namely, the apparent Sino-Soviet alignment, reparations out of current production, and the necessity for mutual trade between China and Japan. The first and third items were raised by General MacArthur; the matter of reparations was raised by Dr. Wang.
General MacArthur told Dr. Wang that world opinion today takes it for granted that the Chinese Government has now aligned itself with the Soviets and that by doing so, the Chinese are flirting with danger not only because they are thereby making it difficult, if not impossible, for the United States to go ahead with the Japanese peace treaty discussions, but also because in the long run, the Soviets will take advantage of China and bring about the Sovietization of China proper. He pointed out to Wang that the Chinese attitude, as indicated by numerous editorials, etc., in the Chinese press, is as inexplicable as it is unrealistic. He said that by aligning herself with the Soviets, China is more and more forcing Japan either into the American sphere, or possibly by force of necessity into that of the Soviets. This would have the result that instead of a peaceful and sympathetic Japan on its doorstep, China might find that Japan has turned its back on China and entirely integrated its economy with the United States or with Russia. He continued, that it would be more to China’s advantage to create a triangular arrangement, whereby Japan would be enabled to assist China economically, as well as politically, in the struggle which lies ahead with Communism and perhaps the Soviet Union. He said that sooner or later Japan will again get on its feet and that by continually criticizing what is being done in Japan, the Chinese are only harming themselves.
As to the second point: Dr. Wang stated that the Chinese are most desirous of obtaining a larger share of reparations out of current [Page 555] production. In rebuttal of this statement, General MacArthur drew two parallel horizontal lines, the lower line representing Japan’s present 45% production and the upper line a theoretical 100% production. He said the space between the two lines could be reached only at the expense of the United States and that the Chinese must consider us very stupid if they believe that we would fill in the gap only to have production turned over to the Chinese in the form of reparations. He further stated that even the 45% production had been achieved only as a result of considerable assistance from the United States which is now $300 million behind on this venture. He pointed out that China has already received a tremendous share of Japan’s external assets in the shape of capital goods in China, Manchuria, and Formosa, and that Japan has lost huge sums in its investments in Korea and elsewhere. He asked Dr. Wang how the Chinese could possibly expect Japan to produce sufficient goods and turn over a substantial amount thereof, out of current production, when Japan itself is just about keeping alive with American assistance.
The General stated that in his opinion, the current Chinese press campaign is perpetrating a huge fraud upon the Chinese people who expect to receive an endless amount of goods, etc., from Japan, when in fact, there is practically nothing to be given or taken. He asked Dr. Wang why the Chinese Government does not do something to stop the present press campaign; if a change of attitude is not brought about, the Chinese Government in the final analysis will be blamed for having fooled the people.
With respect to trade: General MacArthur pointed out that Japan and China must engage in mutually beneficial trade or economic chaos in the two countries will result. He felt that it is unrealistic to restrict Chinese trade with Japan particularly as the economies of the two countries can be so closely correlated. He said that China should not hope to buy for itself needed capital goods in the United States; the prices in America are too high in relation to what could be produced in Japan, were adequate raw materials (from Chinese sources) available here. Without a mutually beneficial trade between China and Japan, General MacArthur sees no hope for either country.
In the General’s opinion, Dr. Wang left the interview greatly subdued and to some extent disappointed. The General said that he does not known to what extent his remarks may have affected Dr. Wang’s viewpoint, but nothing was spared in an attempt to point out the fallaciousness of China’s arguments and the unrealism of present Chinese tactics. The General feels, and attempted to persuade Dr. Wang accordingly, that China must eventually join the Peace Conference even without Russia; he agrees that a treaty of peace to which [Page 556] Russia is not a partner can not amount to much but that at least we should go ahead, even if Russia does not join. The chair should be left vacant for Russia to take its seat at any stage of the proceedings. In this connection, the General feels strongly that at some time, Russia will join; if she does not, the United States could, when the final draft is ready, reexamine its position and determine whether we should sign the treaty without Russia.
The Sino-Soviet Treaty, and specifically Article 2 thereof, was not mentioned in the conversation. In General MacArthur’s opinion, if China wishes to “get around” Article 2, it can easily find a way to justify its action. He feels that China has taken a position, for reasons not entirely clear to the Chinese themselves, and now relies upon Article 2 to maintain that position.
Please show this letter to Butterworth and Hugh Borton. I specifically request that it go no farther, as it would be most embarrassing to have the above filter back. I feel however, that the General’s views are interesting and undoubtedly important. (It might be well to read this letter in conjunction with my despatch no. 1353, October 27, 1947,77 on the subject of my interview with Dr. Wang.)
Sincerely,