Foreign Relations of the United States, 1947, The Far East: China, Volume VII

893.00/8–147

Memorandum by the First Secretary of Embassy in China (Ludden) to General Wedemeyer ³³

Nanking, July 23, 1947.

Before Mr. Butterworth, the Minister-Counselor, left for Washington, the Embassy prepared for him a memorandum³⁴ which was an examination of possible courses of American action vis-à-vis China. Copies of this memorandum are available in the Embassy. Inasmuch as it was prepared during the first week in July, there is little to add to it except to make a few general remarks which will represent the current thinking of the Embassy with regard to the overall political situation in China.

In the first place, the dominant political party in China, the Kuomintang, once an organization representative of the will of forward-looking Chinese to develop a stable and united nation capable of meeting its responsibilities in the modern world, has lost much of its original vitality. In the words of one well-known Chinese professor, the Kuomintang has become “a political mechanism for the preservation of vested interests”. It has now neither a dynamic program nor a wide popular base with which to meet the threat of militant communism.

Within the past twenty years the leadership of the Kuomintang has shown little, if any, fundamental change in personnel. In retrospect it seems clear that the dominant leaders of the Kuomintang have never been dissuaded from the conviction that internal political problems could be settled by military means alone without consideration of concomitant social and economic problems. Currently there is much to indicate that their actions are still governed by the same conviction and that this conviction is reinforced by their interpretation of the current international situation in spite of the increasing dissatisfaction with Kuomintang leadership among groups traditionally supporting the Party. Perhaps one of the few encouraging features of the Chinese situation is that these groups, realizing that Kuomintang leadership is approaching bankruptcy, are hesitantly seeking an alternative to extremes of both right and left and are hoping for American encouragement.

It is obvious that there exists in China an important and growing Communist problem. It is not necessary to establish proof that there is direct connection and liaison between the Chinese Communist Party and the Soviet Union. The ideological affinity between the Chinese Communists and their brethren of the Soviet Union is in itself sufficient to assure that in the event the Communists were to achieve majority control of a government in China, its basic orientation would be toward the Soviet Union rather than the United States. Judged by historical background and social structure, however, Chinese society is less likely than any society to accept Marxist tenets and Communist forms of society provided that the economic and social burden of the majority of the population is alleviated even in minor degree. It is unfortunate that during the past two decades the National Government of China has shown little aptitude for meeting political opposition other than by force of arms and at the present time the Government, in addition to suffering serious military reverses and the sustained attrition of hyperinflation, is losing the confidence of all classes who are reluctantly being pushed to the left. If present trends continue unchecked, it seems inevitable that a dynamic Communist program will eventually submerge the static defeatism of the present Government.

Judged in the light of the Government’s experience during the last two decades and the continued existence of a social and economic system which offers fertile ground for the growth of communism, it is highly improbable that the Communists can be eliminated as a major factor in China even with substantial outside assistance to the Government in the form of military matériel, economic aid or a combination of both.

Unfortunately the United States possesses no effective means of bringing pressure to bear upon the Chinese Communists except indirectly by fostering the emergence of a regime in China that can rally enough popular support in non-Communist areas to afford a check to the further expansion of Communist control. Judging from our past experience in China, however, we can not hope for the emergence of such a regime while the Government adheres to its present policies and continues to stymie the development of any loyal opposition to these policies.

When General Marshall left China he issued a statement³⁵ which by inference laid down the general requirement that drastic reorganization and reform of the Central Government was a prerequisite to substantial American assistance. It was stated specifically that while the form for a democratic China has been laid down in a new constitution, practical measures would be the test to see to what extent the Chinese Government would give substance to the form.

In mid-April the Government announced the reorganization of the State Council and shortly thereafter the reorganization of the Executive Yuan. At that time the Embassy reported to the Secretary of State that any assessment of the eventual effect of the reorganization must be approached with caution in the light of a series of past Chinese Government reorganizations which had been largely for external effect and had not brought effective change to the Chinese domestic scene. The Embassy’s initial impression, however, was that the caliber and standing of Kuomintang appointees to the State Council indicated at that time some effort to place in positions of power and responsibility some of the most capable, moderate and modern figures of the party. The only other parties willing to join the Government were the Youth Party and the Social Democratic Party. The Youth Party appointees represent a group of Szechuan scholar-landlords who have tended in the past to be affiliated with the right wing of the Kuomintang; the appointees of the Social Democratic Party are a group of elderly scholars without important political following in the country. It was considered at the time that the independent appointees to the State Council offered considerable promise. It was the Embassy’s opinion in April that the composition of the State Council as regards the Kuomintang and independent appointees was as good as could have been expected in the circumstances.

At the time of the reorganization eleven seats on the State Council were left vacant for the Democratic League and the Communist Party in the event that they wished to join the interim government at a later date. This was a useful political gesture, but the Embassy expected no tangible result therefrom.

At the time of the reorganization of government the Embassy pointed out to the Secretary of State that at the same time as the Kuomintang appointed State Councillors a separate Political Committee of the Kuomintang was established. The Secretary General of this Committee was Chen Li-fu, and the Embassy considered it to be a safe assumption that this Committee would have an important role in controlling the Kuomintang political machine and establishing Party policies. The Secretary of State expressed strong criticism of this particular appointment in a conversation with the Chinese Ambassador in Washington early in May.³⁶ This criticism has been vindicated by the subsequent consolidation of the CC Clique’s position and strength.

The reorganized Executive Yuan under Chang Ch’un was considered by the Embassy to be more strongly based than the previous T. V. Soong regime, but it soon became apparent that the political maneuvers of the CC Clique, the pace of military and economic developments and domination from above tied its hands and neutralized its attempts to take remedial action.

In effect, therefore, there has been a limited reorganization of government but one which has failed to bring about any significant changes which were considered last January to be prerequisite to the granting of substantial American assistance. Control of government remains in the same hands, and the policies of the Government are progressively alienating all elements of the community. Latterly, this alienation has been proceeding at an accelerated pace. At the time of the reorganization of government the Embassy indicated that in final analysis the major imponderable in China is whether or not the Generalissimo would be sufficiently flexible to seek and be guided by the advice of progressive and competent public servants or whether he would continue to accept the counsel of reactionaries personally loyal to him, as he has done with respect to Formosa and Manchuria with such tragic consequences to American as well as Chinese interests. It has been the experience of the Embassy over a period of years that there has been little, if any, important delegation of authority, a point on which recently members of the Government associated with the Political Science Group have privately expressed complaints to individuals on the Embassy staff; and regardless of the immediate hopeful signs which were evident at the time of the reorganization of the State Council and the Executive Yuan, subsequent developments have shown that the situation remains substantially unaltered. The Generalissimo continues to be the main determinative force in Government policy.

In this connection, however, it must be remembered that the Generalissimo and his Government regard themselves as fighting not only for their own existence but for national independence against an unscrupulous armed rebellion. In this process, however, reactionary elements are consolidating their power and thereby still further alienating and embittering all who do not go the whole way with them, while progressive elements are intimidated from making themselves articulate and organizing effectively. For example, one of the immediate effects of the recent national mobilization order has been further repressive measures against those who voice criticism of the policies of the Government.

It seems clear that the Generalissimo has never been dissuaded from the conviction that the Communist problem in China can be resolved by force of arms alone without concomitant social and economic reforms, and there is every reason to believe that he is still wedded to the same concept. The course which he is now following unfortunately functions as a stimulus to the progressive development of Communism, a situation which the United States can not long regard with equanimity. The effort to suppress the Communists by force alone has failed and the Generalissimo must be prepared to meet the challenge by other means. The Generalissimo has had the dangers of his present course and the possibilities of other approaches pointed out to him by more than one person whose opinions he respects, but thus far he has remained obdurate. In fact, there is good reason to believe that the Generalissimo and key officials of the Chinese Government, recognizing that the United States has adopted in Europe and the Middle East a firm stand against Soviet political expansionism, are constrained to take steps amounting to a diplomatic offensive in an effort to encourage the adoption of a similar American attitude in China vis-à-vis the Chinese Communists and Soviet Russia. It is regrettable but it is nevertheless a fact that this constitutes the only discernible program of action being undertaken in the face of a prevalent and increasing atmosphere of defeatism.

Actually much of the apparent strength of the Chinese Communists is due chiefly to the inefficiency and corruption of the Kuomintang both on a military and a civil level and—with an alarming acceleration—to popular loss of faith in the Government.

It requires a certain amount of temerity to attempt any forecast but it would seem that one of three possible consequences will follow without much delay from present critical conditions:

1 —That the Generalissimo will assert himself as the leader in an attempt to rally all non-Communist opinion in the country by demonstrating that he has the ability to place into effect a program aimed at improving the national welfare more effectively than can the Communists;

2 —That with threatening catastrophe drawing closer, it is possible that a nucleus of enlightened leaders may emerge who will attract the more liberal elements from within the Kuomintang, be supported by the politically conscious public, and come to terms with the Communists. In such an eventuality, the Generalissimo would assumably disappear from the scene;

3 —There will be disintegration of the authority of the Central Government with the Communists in control of their own territory from which they would use every effort to extend their areas of control. While the Central Government would probably retain control in the lower Yangtze Valley, sectional governments would be established elsewhere under the strongest man or group in the area with all the evils of such chaotic and unstable conditions.

33. Copy transmitted to the Department by the Ambassador in China in his despatch No. 908, August 1; received August 11.
34. Dated July 5, p. 222.
35. Released January 7; for text, see Department of State, United States Relations With China (Washington, Government Printing Office, 1949), p. 686; or Bulletin, January 19, 1947, p. 83.
36. See memorandum by the Secretary of State, May 8, p. 1113.