893.00/3–2147: Telegram
The Ambassador in China (Stuart) to the Acting Secretary of State 32
[Received March 21—2:43 p.m.]
626. Please repeat immediately to Moscow following message for personal attention General Marshall as requested in Moscow’s 2, March 16, 3 p.m.33
Section I. Greatly appreciate your telegram. The following statement is based on best information available here and represents my considered views.
General Lucas did not possess any significant information on the state of the Chinese Army; military appraisal represents the best estimates of General Soule and other informed observers. Steele is in Japan; Durdin’s statement is contained in Section II of this [Page 74] message and was prepared independently by him without consultative discussion with Embassy or any Embassy staff member. General McConnell’s analysis of the state of Chinese Air Force is in Section III.
“At this time the Gimo, who as President of the Executive Yuan is exercising close control of situation, is pointing the Government to organization of the State Council and reorganization of the Executive Yuan. Formal tutelage by the Kmt is expected to be terminated at the end of the present meeting of Kmt Central Executive Committee. Administrative participation in the Government by both the Youth Party and Democratic Socialist [Party] is not yet firmly assured, but the character of the State Council and ministries will be importantly affected by the personalities, as distinguished from parties or cliques, participating in these organs. More important will be the extent of power, stemming from the Gimo, which these personalities will be given to wield though with intensification of civil war. CC clique as well as military groups are increasingly active. A significant feature of events leading to T. V. Soong’s resignation was the relatively large amount of independent, outspoken opinion expressed; although much opinion came from the Kmt cliques, yet for once there was wide public discussion. There is possibility that in the reorganized government public opinion can become more vocal and that any new administrative heads will have a measure of power commensurate with their responsibilities.
While liberalization and reform are restricted within certain limits by exigencies of civil war, administrative efficiency and responsibility for the public welfare can be enhanced. In fact, corruption, favoritism and administrative blundering are luxuries which National Government will be unable to afford in face of tightening military situation. An example of what can be done, given sufficient determination, was the vigorous moves of the Central authorities during the recent panicky Shanghai financial situation.
It is now apparent that the Government, while holding present positions in Manchuria, has committed itself to an all-out effort to reduce Communist strength and holdings in north China. If successful in this effort, the Government will have breathing space to attempt restoration lines of communication which continues to be basic prerequisite to any economic rehabilitation.
Government forces have superiority of arms and equipment and it may be anticipated that in initial phases Government offensive will meet with substantial success. Ultimate outcome will be affected by a variety of factors which mitigate [militate] against Government successes beyond a period of from 3 to 4 months.
Of these factors the most important are: (1) ammunition supplies are reaching a critical level. Best available information indicates [Page 75] that for American trained and equipped units at present rates of expenditure ammunition stocks may be exhausted in about 3 months. There is no worthwhile data available with regard to ammunition stocks taken from Japs for use in China. (2) Arms, motors and equipment are beginning to need maintenance and repair beyond the capability of the Government’s facilities. (3) Government forces are widely dispersed and dangerously over-extended, particularly in Manchuria. A serious handicap to the Government is the necessity to disperse units to protect railway lines, power plants, coal mines and to maintain peace and order. Disturbed conditions and threats of revolt in Sinkiang, Sikong, and Formosa tend to result in further dispersion of forces. (4) Although morale in the air force is still considered good, the rate of attrition to both personnel and equipment has reached serious proportions and replacements are not available. (5) Poor pay and ration standards coupled with rapidly deteriorating economic conditions affecting the families of troops make for lowering morale. Furthermore, the civil war is generally unpopular and Government troops are susceptible to the Communist propaganda approach of ‘Chinese should not fight Chinese’.
It seems probable that within 3 to 4 months, the Government will be successful in compressing Communists into areas they held during Jap occupation of north China but without having pinned down and destroyed any major Communist force. Thus it is unlikely that Government efforts to restore and maintain rail lines of communication in the face of constant Communist harassment will be successful once the initial impetus of the Government offensive has been lost. As the process of attrition weakens Government forces, it is probable that a period of military stalemate will develop. It is also probable that during this period Communist organizers will foment unrest in Government rear areas, especially south China which has been largely denuded of best troops to meet requirement of north China and Manchuria.
Despite certain hopeful signs that an effort is being made by the Gimo to effect reorganization of Government along more representative lines, the overall situation is dark and, without more determination and sacrifice than has been shown, it will become darker. Outlook is not for a crash, but a slow ebbing of vitality in Nationalist areas. In intramural China, Nationalist strength and cohesive power believed sufficient to prevent sectional cleavages within near future, although rebellions in dependent areas would constitute military drain.
There has been no vital change in underlying economic and financial situation as reported in Embtels 264 and 265 of February 12, 284 of February 14, and 300 of February 17.35 Government has been able to [Page 76] hold economic position since February 16 through its emergency program and general fear of extensive police action. However, economic situation is inherently unstable and precarious, and there is little to prevent repetition of such financial crises as shown Shanghai early in February. The rising tempo of the civil war will accelerate inflation and increase economic instability, and if, as appears by no means improbable, one outcome of the current CEC meeting and pending reorganization of the Government is a division of control over financial and economic policies between Political Science group and CC-clique,35a Government program in these spheres will lose relatively unified direction which at least it had under T. V. Soong.
Although the Gimo rightly likes to emphasize agrarian character of Chinese economy and its consequent inertia and relative stability, nevertheless there must be reasonable order and essential economic activity in the large cities, if the Government is to perform minimum functions of modern state. In view of inability of Government to enforce price control, rationing, etc., effectively by normal methods in these cities, there is an increasing tendency to rely on repressive measures, which, while both inevitable and useful in short run, has dangerous aspects in long.
Therefore, apart from overriding overall political considerations which are likely to become pressing within next 6 months, there would appear to be no immediate need for large loan on economic and financial grounds, though should a panic recur in Shanghai a moderate-sized loan might well be required for its salutary political and psychological effects as much as for its economic impact.
Within recent months the Government has been steadily losing prestige in the eyes of the people and popular support for it has never been at a lower point. Consequently, any changes in the Governmental structure and policies must be sufficiently drastic, not merely to affect foreign opinion, but to raise the level of domestic confidence in the Government. At the present time, for example, the situation in Formosa typifies trends in China with which our association could well become a matter of serious national embarrassment. There is little question but that in Formosa there was understandable popular reaction against official maladministration and corruption. It is unfortunate that rather than attack the evils which brought about this reaction, the Government shows every indication of attempting to quell it by force. The handling of the problem in Formosa, which is now in an acute stage, may offer us an indication of what we may expect elsewhere.
In view of foregoing circumstances, including the existence of a state of civil war, it would seem premature for the US to commit [Page 77] itself to a course of fulsome support of the Government which has thus far given insufficient indication that it will move in directions satisfactory to American concepts or that it has the capacity to revitalize itself. Politically, therefore, it is recommended that we await Government reorganization and then (1) assess the character of the new personnel and (2) observe for a time practical changes which may result in the operation of the Government.
In advocating such a ‘wait-and-see’ attitude, it is recognized that the Government is now engaging a powerful and determined enemy whose relative military potential may well increase as a process of attrition weakens Central Government forces and diminishes its authority. For example, the occupation of Yenan has brought some psychological gain to the Government but has further extended its forces and increased an already serious supply problem.
Our most recent information with regard to the attitude of the Communists was contained in Embtel 535, March 12, and 545, March 13. Regardless of what their real attitude may have been a year ago, it has become increasingly clear since the convocation of the National Assembly that the Communists are not now prepared to join any coalition except on terms dictated by them. We are now inevitably faced with a period of intensive military conflict but I am convinced that we must be prepared to adopt at a certain stage an affirmative policy of such conditional assistance as may be necessary to our national welfare and security in the light of broader world commitments, particularly in connection with American-Russian relations.”
Section II. Following from Durdin:
“In recent months the Central Government has effected no fundamental reforms nor brought about any appreciable improvement in conditions within the country.
The Government remains generally unpopular, and severe repressive measures taken recently in connection with the open declaration of all-out war with the Communists have increased resentment against the regime. Widespread arrests have been made throughout the country of individuals suspected of opposition to the war or sympathy with the Communists, and many have not been heard from since they were detained.
The intensification of the campaign against the Communists has served to strengthen the position of the CC clique and the military extremists. The Kmt secret police dominated by Chen Li-fu have been the most active agents in the drive against anti-Kmt elements. The CC clique has further increased its power through cooperation with the Political Science group. These two factions joined forces against T. V. Soong and are now sharing posts vacated by Soong’s men. The Chen brothers seem particularly bent on enhancing their [Page 78] control of financial and economic institutions and policy, and if government reorganization is carried out will probably obtain further key positions for their men if not for themselves.
The Government seems for the time being to have gotten a grip on the runaway economic situation and curbed the panic of 6 weeks ago. However, as long as military expenditures continue at the present rate economic measures so far taken are not likely to prove drastic or fundamental enough, and an intensification of the financial crisis can be expected that will be certain to increase opposition to the Government.
Government reorganization has so far not been achieved. Members of the Social Democratic and the Young China Parties and outstanding independents have been reluctant to join the Kmt in the State Council and the Executive Yuan because of the Government’s unpopularity, the uncertainty of its prospects in the war with the Communists and the fear that no way could be found to solve the economic crisis. Lack of strong American support for the Government has doubtless also been a factor in the hesitancy of outsiders to come into the administration.
Carson Chang has now agreed to resume political discussion, and reorganization may soon be carried out. President Truman’s speech on Greece and Turkey has convinced many Government and non-Government leaders that the US will soon subsidize the Nanking regime to fight the Communists, and the speech has doubtless encouraged outsiders to come into the administration. Strong anti-Communists generally are beginning to feel that all the Government has to do now to get American aid is to make faces at Russia and continue the campaign against the Communists.
The Central Executive Committee of the Kmt now in session hopes to proclaim the end of sole Kmt responsibility for the Government and the inauguration of a coalition regime, a move designed to create the best possible impression in the US at this time. Chang Chun seems most likely to head the Executive Yuan. It is difficult to see how the prospective new government could effect any real betterment in conditions soon. It is doubtful if outsiders and Kmt liberals would be strong enough to counteract the dominance of the Kmt party machine and military extremists and exercise a decisive influence on national programs and policies. Certainly little change in the prevalence of graft and corruption is likely to be effected in local governments.
On the military side, the Government is undoubtedly experiencing steady and heavy losses in manpower. The supply position is difficult for an outsider to estimate, but Government officers are reported to be complaining to Americans from time to time of shortages, and doubtless lack of spare parts and ammunition is become a serious problem. [Page 79] It is possible that within 6 months or a year Government forces might be reduced to approximate equality with the Communists in equipment and would be outclassesd by an enemy superior in morale and ability to fight with light weapons.
The possibility of the Government completely solving the Communist problem by force alone seems as remote as ever. The Government cannot hope to triumph unless it can improve economic and social conditions in its own territories—so far not a very definite prospect—and thus relieve bitter public dissatisfaction and drain the powerful reservoir of sympathy for the Communists that this dissatisfaction creates.
Global considerations may be an overriding factor, but from the purely China point of vision it seems to me advisable at least for a time to continue a program of withholding further aid to the Government while waiting to see the effectiveness of Government reorganization and the line of action the Government will take following the capture of Yenan. I think the withdrawal of the Marines should be carried out as soon as possible. I believe this would enhance our position with the majority of the Chinese people and make more effective any future steps we might take to promote a settlement of the China civil war.”
Section III. Following from General McConnell:
“The following is a strength report on the Chinese Air Force and its projected operating potential, assuming that outside aid is not forthcoming:
- (a)
- The present strength of the Chinese Air Force is 342 combat air craft and 152 transport air craft, comprising an air force of 494 operational air craft.
- (b)
- There are 430 combat air crews and 186 transport crews.
- (c)
- Present combat sorties are 19 per day and transport sorties are 46 per day. An increased number of combat sorties can be expected in the future.
- (d)
- The attrition rate on combat air craft is 3.2 percent per month. This includes combat losses and losses due to obsolescence. The attrition rate for transport air craft is 2.7 percent per month.
- (e)
- It is estimated that as of January 1948 the Chinese Air Force will be reduced to one-half of its present operational strength, and that by August 1948 it will be totally ineffective except for a few transport air craft. This deterioration will be due to nonavailability of air craft spares.
- (f)
- Ammunition on hand is 13,000,061 rounds of 50 caliber ammunition and 4,000 tons of US bombs. In addition, the Chinese Air Force has on hand 2,778 tons of Japanese bombs that are adaptable to Chinese Air Force fighters. Present monthly expenditures are 1,312,788 rounds ammunition and 684 tons of bombs. At this rate of expenditure, there [Page 80] is ammunition for 10 months of operations and bombs available for 10 months’ operations.
- (g)
- Chinese Air Force effectiveness in present civil strife lies in its ability to disperse any troop concentration with a minimum of effort, its ability to report from aerial reconnaissance any sizable movements, and its capacity to transport comparatively large bodies of troops and supplies by air so as to strengthen strategic points.”