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

121.893/9–1947

Memorandum by Mr. Philip D. Sprouse to General Wedemeyer ⁸

August 23, 1947

Present Situation in China

China is beset with civil war, a deteriorating economic situation, social unrest and the psychological reactions inevitable under such conditions. There seems to be no possibility of any peaceful settlement in the foreseeable future between the National Government and the Chinese Communist Party. Peace proposals during the meeting of the People’s Political Council in May were referred to the State Council, where they were finally shelved. The National Government then issued a General Mobilization Order with the objective of destruction of the Chinese Communist forces. Recent Communist military successes, together with the Government’s increasing economic difficulties, have made less likely the possibility of any peaceful settlement along lines such as those agreed upon during the U. S. mediation effort in 1946.

The Kuomintang

On one side stands the National Government headed by Generalissimo Chiang Kai-shek and dominated by the Kuomintang under his leadership. The reactionary character of Kuomintang leadership, the repressive nature of its rule and the widespread corruption and graft among Government officials and military officers on all levels have cost the Government the confidence and support of the people. Intellectuals and university students have lost confidence in the present regime; private Chinese businessmen have no faith in the Government; and the peasantry under the continuing burden of conscription and taxation are said to be unfavorably disposed toward the Government. It has left only its armies, whose morale shows signs of deterioration; its sprawling officialdom, whose interest lies in the continuation of the regime; and the benefit of the inertia of the masses, many of whom through fear of communism and of the USSR accept the Government as the lesser of two evils. Except among the strict adherents to the Kuomintang line, there is a uniform belief that unless the National Government takes drastic measures of reform, it will inevitably collapse. The only question seems to be the rate at which the disintegration will proceed. All other factors remaining constant, it is generally believed that it will be a slow and gradual process. The Generalissimo, formerly inviolate as the leader of the Kuomintang and the Government, is now described by all except party die-hards—and even by some of them in private—as the key to the situation. There is a divergence of opinion on this score, some of the liberal elements within and without the Kuomintang saying that the Generalissimo cannot change and that he is inherently incapable of carrying out those reforms which will restore to the Government the confidence and support of the people. Others, with equal conviction, feel that the Generalissimo is above all a realist and that he can be “persuaded” to carry out the necessary reforms. These Chinese state that the U. S. is in a position at this time to exert the necessary pressure on the Generalissimo and that if he is faced with the certainty of no U. S. aid unless he reforms he will be compelled to reform. Strict party liners in the Kuomintang say that the U. S. must aid the National Government to prevent Soviet domination of China through the Chinese Communists, but they make little mention of any vital need for reform. In brief, it may be said that the Generalissimo is both the key to the situation in China and the possible stumbling block to reforms which might prevent the eventual collapse of National Government authority.

The Chinese Communist Party

On the other side are the Chinese Communists. Their chief strength is perhaps negative in that it derives and grows from the inefficiency, corruption and misrule of the Kuomintang. The Chinese Communist Party leaders are a ruthless, well-disciplined group, fanatical in their devotion to their cause. They are self-professed Communists, bound ideologically to the USSR, and their eventual aim is admittedly the establishment of a socialist state in China. Their ruthless tactics of land distribution, to the accompaniment of what is in effect lynch law, have made for them bitter enemies among the well-to-do Chinese in the rural areas, countless numbers of whom have fled for refuge to National Government-controlled cities. The Communists have in most areas been extremely antagonistic toward the foreign missionary movement, have persecuted Chinese Christians and have destroyed churches and mission property. On the other hand, there have been conflicting reports regarding the degree of their support in the rural areas under their control. Most well-informed Chinese and foreigners say that the Communist policies of land distribution and other land reforms have benefitted the poor peasants who comprise the vast majority of the population in the rural area, that these peasants have thus been given a vested interest in the continuation of the Communist regime, and that the majority of peasants, therefore, support the Communists. Other sources, including American missionaries in one area of Communist activity, state that the terroristic tactics of the Communists have alienated the vast majority of the peasants against them and that their control is based solely on fear. Whatever the tactics, the Communists have been successful in organizing the countryside against the National Government and in some areas are said to be arming every peasant to whom land has been distributed, with the admonition that he must defend his land.

Other Chinese Groups

Caught in the middle between the misrule and harsh repression of the Kuomintang and the totalitarian ruthlessness of the Chinese Communists are the politically conscious but powerless Chinese who sincerely desire democracy in China. Their emphasis is not so much on the form as it is on the real concept of the democratic way of life and respect for fundamental civil liberties. Many intellectuals, driven by hatred of the secret police system of the Kuomintang and its indifference to the welfare of the Chinese people, are turning to the Chinese Communists. In doing so, they fully realize the implications of Communist domination in terms of its effect on their hopes of democracy in China—they do so only in despair and loss of hope in the possibility of achievement under the Kuomintang. Other Chinese liberals are perhaps deterred from joining the Communist camp through fear of Soviet domination of China and deep-seated opposition to communism. It is generally accepted by many independent Chinese liberals that the minority parties offer no hope in the situation. Their leadership is mediocre and they have no great following. Some of the minority parties have joined the Government and their members have been given Government positions. No objective observer believes that these additions to the Government have in any way improved governmental efficiency or imparted any real democratic flavor to the Government. Other minority party and non-party Chinese have remained outside the Government in the belief that they might be in a better position to influence the Government toward a more democratic approach to China’s problems. Provincial interests in China are reported to be greatly dissatisfied with the National Government and to be critical of its over-centralization of power. Few Chinese believe that such provincial opposition will crystallize to the point of open rebellion unless developments should indicate an imminent collapse of National Government authority, but it is believed that plans are being quietly made in areas such as south China and north China for action by various provincial and National Government military commanders along separatist lines in the event of the collapse of the National Government. Fear of the Generalissimo and the secret police and the traditional Chinese habit of personal loyalties and ties would seem to preclude any such movements unless the participants were assured of success.

Manchuria and Formosa

In specific areas, such as Manchuria and Formosa, National Government rule has seriously alienated the local populace. The rule has been one of exploitation and corruption without regard for the welfare of the people. The latter have been given little or no real voice in the administration of their areas and the people tend to look upon Government officials as aliens and carpet-baggers. In both areas the local people privately express a preference for Japanese rule.

In Manchuria, the memory of Soviet occupation, to the accompaniment of looting, murder and rape, is so fresh in the minds of the people that they are not favorably disposed toward the Chinese Communists, whom they associate with Soviet Russia, and the North-easterners in Government-controlled areas still express a preference for National Government rather than Chinese Communist rule. They point out, however, that given continued deterioration of the economic and military situation, exploitation for personal gain by Government officials and the failure of the Government to appoint Northeasterners to positions of real authority and control in the civil administration in Manchuria, the local people will in due course turn toward the Chinese Communists as the lesser of two evils. The Chinese Communists have played upon this feeling by enlisting the services of Northeasterners in those parts of Manchuria under their control. They have named Northeasterners to provincial chairmanships and to the command of their armies; they have recruited the majority of their forces from the local Manchurian population; and it is said that they have modified and tempered their land distribution program in Manchuria.

In Formosa there is a similar picture in that Formosans have been denied a voice in the administration of the island. The Chinese have maintained that the Formosans did not have the administrative personnel to participate in the higher levels of the administration, but foreign observers familiar with conditions on the island during the period of Japanese occupation say that this is not true and that the Formosans did have such personnel. These observers say that the majority of such Formosans were probably killed or fled for safety during the March purge by the Chinese Government of all Formosans suspected of being connected with the incident which had led to the presentation of Formosan demands for a share in the Government and for the discontinuation of certain discriminatory monopoly practices. Formosans are now reliably said to desire a United Nations trusteeship or an American guardianship for the island since they feel that the lot of the island under Chinese rule is hopeless. The misrule of the Chinese in this island and the Formosan uprising against that rule had no Communist inspiration, although the situation now offers fertile ground for the spread of Communist influence and Chinese Communist agents are reported now to be on the island.

The USSR Vis-à-Vis China

Forming a background for the situation in China is the USSR. In spite of the Sino-Soviet Treaty and Agreements of August 1945, which granted the USSR an equal share in the administration of the most important railway lines in Manchuria and certain un-named subsidiary enterprises serving those railways, a lease of Port Arthur as a naval base and the establishment of Dairen as a free port with certain Soviet rights at that port, there has been a steady deterioration of relations between the two nations. In the exchange of notes relating to this Treaty, it was provided that the USSR would give China “moral support and aid in military supplies and other material resources, such support and aid to be given entirely to the National Government as the central government of China”. Such aid has not been forthcoming and the USSR has not permitted the Chinese Government to take over the civil administration of Dairen and the Port Arthur area as provided for in the Agreements on Dairen and Port Arthur which accompanied the Treaty. Furthermore, the USSR timed the withdrawal of its troops from Manchuria in such a way as to favor Chinese Communist occupation of various points in that area and, either directly or indirectly, made available to the Chinese Communist forces the large amounts of military equipment left by the Japanese forces in Manchuria at the time of their surrender. In brief, the USSR has given no indication of any effort to assist the Chinese Government and has instead taken action which has favored the Chinese Communists in Manchuria. It can be said, therefore, that the USSR cannot be divorced from partial responsibility for the weak position of the National Government vis-à-vis the Chinese Communists in Manchuria.

Chinese Government charges that the USSR has trained Korean military units in north Korea for service with the Chinese Communist forces in Manchuria have not been substantiated by concrete evidence, although there is evidence that sizeable Korean units are in the Chinese Communist armies in Manchuria. It is believed that these Koreans were local residents of Manchuria and that the Communists have recruited them from the local population. Similar Chinese charges of Mongol participation in the fighting on the side of the Chinese Communists also remain unsubstantiated. Other Chinese charges include those regarding the presence of Soviet and Japanese military advisors with the Chinese Communists and the presence of Soviet-trained Japanese troops. Japanese soldiers have been captured by the National Government in Manchuria, but there has as yet been no evidence that they were Soviet-trained. It is likely that Japanese military advisers have served with the Chinese Communists; this is a practice that has been followed by both the Chinese Government and the Chinese Communists. The same is true of Japanese soldiers in fairly small numbers. No concrete evidence has been found by U. S. observers of the presence of Soviet military advisers with the Chinese Communists.

Other Soviet machinations which have embarrassed the Chinese Government are those of Soviet interference in western Sinkiang in supporting and inciting native peoples against the Chinese administration; the recent border clash between Chinese-supported native troops in Sinkiang and Outer Mongolian troops; and Soviet intrigue among the Mongols of Inner Mongolia and western Manchuria. There is basis for some of these charges, although Chinese reports on the subject have tended to magnify them out of proportion for publicity purposes. It is apparent that the Chinese Government, viewing the U. S. policy in Greece and Turkey,⁹ feel that a similar Soviet threat exists to Chinese territory and that the U. S. policy of resistance to Soviet expansionist aims in the Middle East and its aid to countries so threatened make it inevitable that the U. S. will adopt a similar policy with regard to China.

The Chinese Communist Party Vis-à-Vis the USSR and the US

The close ideological affinity between the USSR and the Chinese Communists is sufficiently clear to assure that Communist domination of China would result in a basic orientation toward the USSR rather than toward the U. S. It seems unnecessary to establish proof that there is direct connection and liaison between the Chinese Communist Party and the USSR since clear indications of Chinese Communist sympathy towards the USSR and antagonism towards the U. S. have been frequently revealed by Chinese Communist propaganda and actions. Reliable reports show that the Chinese Communists constantly foster anti-US feeling in areas under their control, picturing the U. S. as an imperialist power which has as its objective the enslavement of the world. The Chinese Communists in some areas of north China inform the recipients of UNRRA supplies from the US that these supplies were contributed by the USSR. The Chinese Communists offer no criticism of the Sino-Soviet Treaty of 1945, which is a reversion to the so-called “unequal treaties” of the last century, but attack violently the Sino-US Commercial Treaty of November 1946¹⁰ and the Sino-US Aviation Agreement of December 1946¹¹ as proof of U. S. imperialistic aims. These last two documents were based completely on principles of equality and reciprocity.

The Chinese Communist Problem

The Chinese Communist problem must be viewed in two lights: one, its setting in the Chinese internal scene, and two, its relation to the international scene and to U. S. interests.

1. Internal

Internally, it must not be forgotten that the Chinese Communist problem has existed since the split between the Kuomintang and the left-wing and Communist group of revolutionaries in 1927. The Chinese Communists have survived the campaigns of extermination directed against them since that time, interrupted only by the period of relative harmony in 1937 and during the first few years of the war. At present, in numbers, in military strength and in territory, the Communists are stronger than ever before in the history of their party. Some of this strength has come from Soviet action in Manchuria, which enabled the Chinese Communists to strengthen their position in that region. In China proper, it has come purely from Chinese sources, both positive and negative. It is positive in that the Chinese Communists have a strong party discipline and morale, a devotion to their cause, a capacity for endurance of hardships and high organizational ability in the rural areas—in short, it is a dynamic movement which is making a bid for leadership in China. Communist strength is negative in that the Communists profit from the misrule and corruption of the Kuomintang and from the consequent unrest, misery find discontent of the people. If the Chinese Communists can convince the people that they will offer better government and will do more for the welfare of the people, it will be a challenge that the Kuomintang will find it difficult to meet. The Chinese people are believed to be generally anti-Communist and they fear Soviet control of the Chinese Communist movement—these are handicaps to the Chinese Communists and conversely serve to the advantage of the Kuomintang. The latter’s misrule, however, makes possible the spread of communism and unless the National Government can take drastic measures of reform and unless it can take steps to alleviate the misery and suffering of the people, China will be a fertile field for the further spread of communist influence and control.

It is for these reasons that the Chinese Communist problem is primarily an internal one and that no real and final settlement of this problem can be effected except by the Chinese themselves. The problem, under the guise of communism or some other ism, would exist under present conditions regardless of the international situation. It is the problem of peasant unrest which has traditionally in Chinese history led to uprisings and revolutionary movements culminating in the overthrow of the ruling dynasty. In the present instance, the movement is under Communist leadership but none the less has its source in the misery and suffering of the peasant, who customarily and traditionally endures until leadership is provided to translate his feelings into action. It is interesting to note that there have been reliable reports indicating that the revolutionary fervor of the peasants has in some cases outstripped the Communist leadership and the latter has been attacked by the peasants as being too conservative. In the absence of the international aspects of the problem, there might be an early victory by the opposition to the National Government, but the only organized opposition to the Government in this case is Communist-led and it is thus handicapped by Chinese suspicion of Soviet domination of the movement and of communism itself. The spirit of chauvinism among the Chinese and the strong urge for national unity and independence make it unlikely, however, than [that] any regime can last indefinitely in China if it is subservient to a foreign power and represents, in effect, a puppet state.

2. External

Externally, the Chinese Communist problem is highly complicated by the international aspects thereof—that is, the problem of communism and the Soviet connection with the Chinese Communists. Were these factors not present, the proper course for the U. S. would be to withdraw completely from China and allow the Chinese people to settle their own problems. However, faced with the apparent aims of the USSR to embarrass the present Chinese Government and to encourage and assist, when possible, the Chinese Communists in their aim of domination of China, the U. S. cannot view with indifference the spread of Soviet influence in this area, with the probable further spread of communism to areas in Asia lying south of China, should the Chinese Communists gain control in all of China. Present Soviet aims seem to be the maintenance of a more or less watch and wait policy since the deteriorating economic and military situation in Manchuria requires little or no action on their part to ensure eventual Chinese Communist control of that area. Soviet objectives of the integration of the economy of this region with that of Siberia, through access to food and raw materials, would seem to be served by Chinese Communist control of Manchuria. This would serve to remove from direct contact with Soviet territory in this region an obviously unfriendly Chinese Government which has close relations with the U. S. The Soviet detachment of Outer Mongolia from China in a legal manner as a result of the plebiscite provided for in an exchange of notes accompanying the Sino-Soviet Treaty of 1945 has produced the fiction of an independent state, which is actually to all intents and purposes an integral part of the USSR. Soviet aims in Inner Mongolia may be expected sooner or later to be directed to the spread of Soviet influence in that area under the guise of Outer Mongolian interests. In brief, Soviet aims seem to be directed toward the gradual detachment of segments of Chinese territory contiguous to Soviet borders through local peoples with their counterparts in Soviet territory and the ascendancy of the Chinese Communists in Manchuria.

Factors Influencing US Policy Toward China

Faced with the prospect of Chinese Communist control of Manchuria, the U. S. must consider the situation primarily in the light of its short and long term interests. It is manifestly not in the interests of the U. S. that there be established in China a government dominated by the Chinese Communists. Viewed in the light of U. S. security and strategic considerations, U. S. policy toward China must be directed, insofar as it is possible and practicable, toward preventing the development of a situation whereby the Chinese Communists would gain control of all of China. In considering U. S. policy we must take into account the attitude of the Chinese people, the question of the United Nations role, the question of US-Soviet relations in the Far East and the extent to which we are prepared and are able to go in terms of material aid to assist China.

1. Attitude of the Chinese People.

While criticism of U. S. policy toward China has been an oft-repeated theme in Chinese Communist propaganda, the attitude of non-Communist Chinese toward U. S. policy must not be overlooked. Many of those non-Communist Chinese critical of U. S. policy are among the most pro-US groups in China. Many of them are outstanding intellectual leaders in a country where the influence of such persons plays a much more important part in the political life of the country than is the case in the U. S. Many of them are American-educated and they look to the U. S. for support for the cause of democracy in China. Any policy adopted by the U. S. which caused them to believe that our policy toward China was motivated solely toward stopping the expansion of communism without regard for the principles of democracy, self-determination of peoples and the continued existence of an unpopular repressive government in China would cost the U. S. heavily in prestige in China, as well as elsewhere in Asia, and would have repercussions upon our position among liberal elements throughout the world. It would probably serve to turn many such Chinese toward the Communist camp.

2. Role of the United Nations

In view of our experience in Greece, it is believed necessary that the U. S., in the event of the adoption of a policy of extending aid to China, make it clear that we are not by-passing the United Nations and that the U. S. is prepared to work through the United Nations and its agencies in any program of assistance for China at such time as that organization or its agencies are prepared to assume such a responsibility. Some such action is necessary in order to bolster up and strengthen the prestige of the United Nations and to make clear to the world that our motives are to assist China in its efforts to achieve economic stability and to carry out a program of rehabilitation.

3. US-Soviet Relations

Consideration must be given to the effect on the USSR of any measures of assistance that the U. S. may decide to extend to China. If the U. S. should extend military aid to the Chinese Government in the form of training of troops and munitions of war, it is more than likely that the USSR will take similar action to assist the Chinese Communists, either openly or covertly—the latter course is believed to [be] more likely since it would make it easier for the USSR to attack U. S. military aid to China in its propaganda and to enter a protest to the United Nations against “intervention” in China. In any event, the result is likely to be an increase in the tension between the U. S. and the USSR and the making of China into a second Spain with dire consequences to the Chinese people as a whole.

4. Extent of Aid Possible for China

In any consideration of the question of aid to China, the U. S. must weigh carefully the relative importance of China to our own security and strategic interests in relation to other parts of Asia and the world. China’s needs are great, but the resources of the U. S. are not limitless. We must, therefore, consider whether aid given to China might not be better spent in other parts of the world. It might be wise from a long range standpoint to concentrate any assistance that we might give to China in those areas where it might be most feasibly implemented under present conditions and where the effect on other parts of Asia might be felt to the greatest extent. This would mean a plan for economic assistance, within the limits of our capabilities, in those areas south of the Yangtze and contiguous to southeast Asia, which would serve as an example to those areas and which would also tend to block the further expansion of communism both in China and in other parts of Asia of importance to the U. S. This area is not within the zone of civil war and the cost of a program of aid in this limited area might place such a program within our capabilities.

Present Trend of Developments in China

A continuation of the present trend of developments in China appears to indicate that if the National Government, left to its own devices without any assistance from the U. S., does not change its policies it will sooner or later be confronted with two possible alternatives: (1) At some stage of its disintegration the Government will decide upon a compromise settlement with the Chinese Communists—such a compromise is likely to be on terms which would eventually mean the emergence of the Communists as the dominant group in China. (2) The Government will not compromise with the Communists, in which case the Communists would in the not too distant future gain control of Manchuria and probably parts of north China, while National Government control in south and central China will gradually contract through the development of separatist movements under local provincial leaders. The gradual spread of Communist control and influence, either by direct attack or through agreements with such provincial leaders, will then result in the eventual absorption of all of China under Communist domination. A coalition form of government may obtain for some time under such a dispensation but the Communists as the only well-organized force would be the dominant force. Lacking the administrative and technical personnel to administer all of China and faced with the prospect of assuming the burden of rehabilitation and reconstruction of the entire country if it were to assume full control of the governmental machinery, the Chinese Communist Party would be forced to proceed slowly for a period of years; it seems unlikely that the Communists would wish to be placed in the position of taking full responsibility for these tasks for some time to come, since the USSR would obviously be in no position to offer any sizeable assistance in restoring China’s economy. That would leave only the U. S. in a position to provide the foreign aid which is vital to China’s economic recovery. For these reasons, it is possible that while the Communists might emerge as the dominant group if the present trends continue, they would probably prefer to continue the form of a coalition for some years to come and China would be a very minor asset to the USSR under such circumstances.

Courses of Action Open to the US

There are three broad courses of action open to the US: (1) All-out aid to the National Government for the purpose of destroying the Chinese Communist Armed Forces and Communism; (2) withdrawal from China of US official agencies except for the diplomatic and consular establishments and extension of no assistance; and (3) a program of conditional aid in an effort to foster the development of a soundly-based regime which would prevent the further spread of communism in China and its corollary, Soviet political expansionism.

1.All-out Aid to the National Government

Viewed in the light of our past experience in China there seems to be little hope that a program of all-out aid would result in the achievement of our objectives and such a program would probably require expenditures of such enormous proportions that it would not be within our capabilities. Aside from the international complications discussed above, there seems to be little hope that the presently constituted Chinese Government can eliminate communism from China even with substantial U. S. military and economic aid. The present Government offers no hope that it can carry out a program which would provide effective opposition to a dynamic communist movement in China. Within the past 20 years, the leadership of the Kuomintang has shown little, if any, fundamental change in personnel. It seems clear that the Kuomintang leaders have never given up their conviction that internal political problems could be settled by military means without consideration of the concomitant social and economic problems. Their interpretation of the present international situation, in spite of the growing opposition to Kuomintang leadership from groups who have been traditional supporters, has reinforced their conviction that force can solve the political problem of communism. A program of all-out aid might temporarily save the present Government, but it would solve none of China’s social and economic problems which must have a solution if peace and stability are to be achieved. It would mean merely the postponement of the evil day for the present leadership and when the pent-up forces demanding change in China did emerge they would likely be much more explosive than at present. It would probably mean bloody and violent revolution and the U. S. would be castigated as the enemy which had delayed the necessary changes.

2. Withdrawal from China and Extension of No Assistance

Such a course is manifestly impossible since it would be equivalent to cutting the ground from under the feet of the Chinese Government and laying the country open to eventual communist domination. It would have repercussions in other parts of Asia and would make easier the spread of Soviet influence and Soviet political expansionism in Asia. While it would allow for concentration upon a line of defense against Soviet expansionism in areas removed from the complexities of the China scene, such a withdrawal would be indefensible in the U. S. and would not be to the long range advantage of the U. S. in China, where our prestige is still higher than that of other nations and where we can utilize such prestige to the benefit of both China and the U. S.

3. A Program of Conditional Aid to China

A program of conditional aid to China would have the effect of bolstering the opposition to Communist expansion; it would maintain the U. S. position and influence while encouraging the progressive groups both within and without the Government to take measures to help themselves; it would demonstrate our willingness and ability to assist in carrying out feasible projects of mutual benefit to the U. S. and China; it would contribute to the welfare of the Chinese people through the gradual development of economic and political stability in China; and it would have a desirable effect elsewhere in Asia. It must be admitted that such a program would not be popular with the present Chinese Government, which tends to blame the U. S. partially for the ills of China with particular reference to the Yalta Agreement and the part it has played in the Manchurian situation. Many Kuomintang party liners are critical of the mediation effort during General Marshall’s mission to China and say that this prevented National Government occupation of Manchuria. The Government is also guilty of a defeatist attitude in saying that without U. S. aid the Chinese Communists are certain to overthrow the Government and establish a communist regime in China. Allowing for propaganda and pressure motives behind such statements, it is undoubtedly true that the present Government has suffered deterioration psychologically as well as morally. A conditional program of aid should serve to force the Chinese toward self-reliance and an effort to take steps on their own initiative to assist in solving their economic difficulties.

In the light of the foregoing, it must be assumed that the success of any program for aid to China must be based on the willingness of the Chinese Government to carry out a wholesale house-cleaning and thoroughgoing reforms which would make possible the establishment of administrative machinery necessary for the effective implementation of such a program. It must require the emergence of a Government solidly based upon the support of the public.

In approaching the problem of achieving the establishment of such a regime in China, we must realize that the Kuomintang under its present leadership is a static party but that it contains many capable individuals who would welcome the removal of the stultifying leadership now in power. We must realize that the Generalissimo himself is the key to the situation and that unless he can be convinced of the necessity of change there is no hope for the emergence of an enlightened leadership while he is in power. We must, therefore, be prepared to assume that the Generalissimo is not indispensable to the attainment of U. S. objectives in China. Our approach to the problem must be realistic: If we can use the Generalissimo to make the necessary changes which will revive the Chinese Government—morally, spiritually and materially—it will simplify our problem. He can take the necessary measures, but he will be reluctant to do so. He will not reform as long as he retains the conviction that the U. S. will aid him, regardless of what he does, because of the USSR and American need of China in a war against the USSR. We must be careful to avoid being misled regarding steps that he must take. In short, our aid must be conditioned upon performance by the Chinese Government and not upon promises of performance. Premature extension of aid of any kind might well serve to defeat the purposes of our aid by strengthening the Generalissimo’s conviction that we must aid him because of the USSR. Such aid must also be carried out under strict U. S. supervision to ensure its effectiveness.

We must have concrete evidence of actual improvement in the Government prior to the actual extension of aid and there must be provision for the stoppage of aid if at any point the U. S. felt that the necessary measures of reform were not being adequately implemented. Reform measures should be those which would at least indicate the beginnings of democracy in China even though they would not result in the early establishment of a representative government chosen by the electorate. This should include the complete separation of the Kuomintang from the Government; the abolition of the existing secret police system; the cessation of secret arrests and arrests of civilians by military organs or the gendarmerie; the reorganization of the police system with general National Government supervision but under local control; the prompt and public trial of persons arrested and the full exercise of the right of habeas corpus; the cessation of intimidation of teachers and students; the reinstatement of university professors and students dismissed solely for their political views; protection of the freedom of the press; reorganization of the National Government, including both the Executive Yuan and the State Council, to ensure participation by responsible Chinese without regard for party affiliations; clearly defined delegation of responsibility and authority in the Government to increase efficiency, encourage initiative and prevent beyond all doubt the domination of governmental affairs by one individual; and the strengthening of the Control Yuan to ensure the removal and punishment of corrupt officials. A time table for the carrying out of these measures might be prepared and provision should be made for halting the aid program if the measures were not being effected.

The foregoing are drastic changes but we must remember that the Generalissimo is not immortal and that there must be built at this time a structure that will be sufficiently solidly based to endure his passing without upheaval and chaos. Only through the steady growth of good government in the areas under National Government control can there be found an effective counter-measure against Communist expansion.

One of the most important problems in regard to the question of aid to China is the military problem. It bears vital relation to the political and economic problems. There are reasons both for and against any program of military aid to China. Reasons for are: (1) to prevent Communist victories which would result in Communist domination of the nation; (2) a moral obligation to continue the supply of munitions and replacement parts for troops previously equipped with US weapons since failure to continue such supply would, in effect, be equivalent to disarming these troops; and (3) to carry out a reduction and reorganization of the Chinese armies which would probably be impossible without US aid. Reasons against military aid are: (1) the probability of increased US-Soviet tension and of Soviet military aid, either openly or covertly, to the Chinese Communists, which would result in making China a second Spain and might eventually lead to a third world war; (2) the moral position in which the US would be placed, with damage to its prestige, were it to take action which could be construed as intervention in or encouragement for civil war in China; and (3) the possibility that, given military aid, the Generalissimo would feel that once such a US commitment was made he could avoid making the necessary political reforms in the assurance that he would receive US aid regardless of his actions.

There is, however, one aspect of the question of military aid which is paramount. Without US military assistance the Chinese Government could not, or would not, carry out any reduction and reorganization of its armies. Such action is a sine qua non to any real and lasting improvement in China—both politically and economically. So long as the National Government maintains huge armies and devotes approximately 80 percent of its budget to military expenditures, there can be no lasting solution to its economic problems. Furthermore, so long as China maintains an army staffed by its present type of officers, who possess great political power and who either control or constantly interfere in the civil administration, there can be little effective progress toward good government in China. Equally important, both politically and economically, are the questions of soldiers and food for the huge armies now being maintained by the National Government. The burdens of conscription and taxation, to which may be added military exactions, are those which lie most heavily on the peasantry and which have long been basic causes for peasant unrest and dissatisfaction with the Government.

Under a program of conditional aid to China, there could be included provisions for US training and equipping of a greatly reduced Chinese National Army of, say, a maximum of 10 divisions. A plan for such a program should be carried out with the clear and public understanding, in accordance with an agreement by the Chinese Government, that the Chinese troops so trained would be employed solely for purposes of protecting lines of communication and certain important centers, such as Peiping, Tientsin, Tangshan and Chinwangtao, against possible Communist attack and that such troops would not be used for offensive action against Communist-controlled areas. We would run the risk that the Generalissimo would at the first opportunity attempt to use such troops for offensive purposes—he could use the excuse that it was in reality defensive action against Communist attack. We would run the risk that the Generalissimo would take such military aid as indication of a firm US commitment to support him regardless of his actions. There would be, however, certain defenses against such action: The US should retain control of the reserves of equipment and munitions for these troops in order to prevent their accumulation of munitions of war sufficient for offensive purposes. The US should be prepared to withdraw completely from China and stop all aid to the National Government at the first instance of violation of the agreement limiting the use of these troops. This should be made definitely known to the Generalissimo and stated publicly. In any event, a considerable period would pass before the US could properly train and equip Chinese troops and some stabilization of the military situation in north China might be achieved by that time through military action by the existing Chinese armies.

The chief problem under such a plan would be that of demobilized personnel. Some program would have to be worked out similar to that prepared under General Marshall’s direction in 1946, which envisaged the formation of a Manpower Demobilization Commission. The problem of enlisted men would be relatively simple in that the vast majority of them are peasants, who could be returned to their native places. Officers, particularly high ranking ones, would present a more difficult problem. It would perhaps represent a saving to the Government if many of the older generals were retired on sufficient pension. For other officers it would be necessary to obtain employment or to provide some type of vocational training. The police forces might absorb some of them and construction projects might utilize the services of others.

Such a program of US military aid would undoubtedly arouse suspicion and criticism from the Chinese Communists and the USSR, and probably from many non-Communist Chinese. However, the implementation of such a plan should be postponed until there was definitive and completely convincing evidence of a real change in the National Government—a change in procedure and a change in spirit—and full publicity should be given to the objectives behind the plan. It is felt that the gradual development of such a program, if successfully implemented, would be welcomed by the majority of Chinese. It would eventually mean an opportunity for relief from military oppression and exactions, the development of a modern army along democratic lines, the removal of the military from power in China, the lightening of the burden on the peasantry, and finally the reduction of military expenditures and the attendant intolerable burden on the national economy.

Alternative in the Event of Chinese Rejection of a Program of Conditional Aid

If the Chinese Government should refuse to accept a program of US aid under the conditions outlined above or if it should be found necessary to halt such a program because of Chinese failure to carry out the specified conditions, the US must consider carefully the steps it should take. Assuming that, without US aid, the process of National Government disintegration will continue, it may be expected that at worst there will be a long period of disturbance verging on chaos and for a long time thereafter China would remain an insignificant asset to the USSR, while at best a middle group might emerge which would be able to restore a modicum of stability in the areas under its control. The US should follow an interim policy of the greatest possible cultural and humanitarian aid to the Chinese people. It should encourage the traditional US interest in mission work, in education, in public health, in agriculture and in related fields. Aid of this kind would be to the interest of both China and the US and would give evidence of our concern for the Chinese people. The US should also be prepared at the proper moment to throw its support, both moral and material, to any group or combination of groups which gave indication of ability to consolidate its control over sizeable portions of the country and which would be receptive to US ideas of government. For this purpose, we might find it advisable to keep in being our military and naval advisory groups in China. The US might also during this period extend economic aid for certain small feasible projects removed from the area of actual hostilities which would aid the economy of the country. These measures would serve to give notice of our continuing interest in China, would show that we were not withdrawing from the country and would indicate that we would be prepared to give aid to a government in China which merited such aid and which would be in a position to make effective use thereof. Our moral position would not suffer thereby and the opportunity might come sooner or later to throw the weight of our influence and prestige behind a regime in China which would be worthy of aid. We would, of course, run the risk of Communist domination of the country during such a period, but certainly no more so than if we attempted, at tremendous cost to the US, to bolster up a government discredited in the eyes of its own people. To do the latter would harm US prestige both in China and elsewhere in the world.

In carrying out any program of aid to China, we would need full publicity through our USIS program to explain the US position. It should make clear that we are in opposition to narrow extremist control as represented by the present Kuomintang leadership. In doing so, we would be making an appeal to enlightened and progressive Chinese of all political colorations and we would be offering them a firm rallying point which has thus far failed to materialize from the US. This has made it impossible in the past to capitalize upon the vast reserve of good will for the US which is still extant in China and would, in effect, be an effort to give practical implementation to the appeal made by General Marshall in his statement of January 7 for the assumption of leadership in China by the liberal elements.

Possibility of Chinese Compromise Solution

A final point worthy of consideration is that regarding the eventual solution of the Communist problem in China. Many politically conscious Chinese feel that a compromise solution is eventually necessary if China is to avoid a never ending civil war which will exhaust the nation before final victory is won by one side or the other. An exhausting civil war, they feel, tends to provide fertile grounds for the spread of communism and in the final analysis would make a Communist victory inevitable. These Chinese feel that such a solution may provide either for a coalition government together with local autonomy for the areas under Communist control or for a federated system which would allow Communist autonomy for their areas with at least nominal allegiance to the National Government. They point out that this would at least bring peace to the country and the desire for peace is the one need on which there is unanimity of opinion throughout the nation. Other Chinese feel that there can be no solution of the Communist problem without a third world war and that the US must act on that assumption. Whatever the solution, the US must be prepared to accept the possibility of a compromise solution between the Kuomintang and the Chinese Communists—this might arise as a result of good government in National Government-controlled areas and the realization of the Chinese Communists that it would be to their advantage to seek peace. Under present conditions it is not possible that they would seek a compromise solution, since a continuation of present conditions holds open to them the prospect of eventual collapse of National Government authority and control and their eventual domination of China. While it is not a US objective to encourage or foster the idea of a coalition government with Communist participation therein, it is important that we not act in such a way that we would be placed in the position of preventing a compromise solution if the Chinese themselves sought such a solution and considered it desirable for China.

Philip D. Sprouse

8. Presented to General Wedemeyer at Nanking on August 23. Copy submitted by Mr. Sprouse on September 19 to the Director of the Office of Far Eastern Affairs (Butterworth).
9. See Department of State Bulletin, Supplement, Aid to Greece and Turkey, May 4, 1947, p. 827, and Foreign Relations, 1947, vol. v, pp. 1 ff.
10. Department of State Treaties and Other International Acts Series No. 1871, or 63 Stat. (pt. 2) 1299.
11. Department of State Treaties and Other International Acts Series No. 1609, or 61 Stat. (pt. 3) 2799.