Foreign Relations of the United States, 1948, The Far East: China, Volume VII

893.00B/6–948

The Ambassador in China (Stuart) to the Secretary of State

No. 267

Nanking, June 9, 1948.
[Received June 22.]

Sir: I have the honor to enclose for the information of the Department the texts, as broadcast during late April and early May 1948 by the North Shensi Radio, of three speeches¹² by prominent Chinese Communist leaders which indicate important, if transitional, changes in Chinese Communist tactics. These speeches are: (1) comments on questions arising during the agrarian reform which were made by Jen Pi-shih, a member of the Chinese Communist Party’s Central Executive Committee to an enlarged session of the Northwest Liberated Army’s Front Committee on January 12; (2) an article entitled “A Labor Policy and Tax Policy for Developing Industry”, by Chen Po-ta, a member of the Central Committee of the Chinese Communist Party, and; (3) an address by Mao Tze-tung, Chairman of the Central Committee of the Chinese Communist Party, delivered to a meeting of the Shansi Suiyuan Liberated Area’s cadres on April 1.

For convenience there follows a brief summary of the three rather verbose pronouncements:

(Begin Summary of Articles)

1. Jen Pi-shih. During the past year or two, too many individuals during the agrarian reform have been purged and too many have been incorrectly classified. Some of the mistakes have been the result of grudges. In the future care must be taken to avoid making enemies unnecessarily. A good criterion is the relationship of exploiter to the exploited. Hence the 1933 guide, “How to Analyze Classes” has been reissued. Jen then outlines in some detail the five classes of society.

The elimination of the feudal classes is a ruthless struggle. The backbone of the Communist movement is the poor peasants and the farm laborers. It is, however, necessary to unite with the middle peasants lest the poor be isolated and the revolution fail. The middle peasant has much to offer to the poor in terms of experience and practice. There has been an increasing Leftist tendency to encroach on the interests of the middle peasants by improperly classifying them and by not wanting them to participate in community life. The differences which do exist between the poor and middle peasants can be resolved, since the middle peasants are also subject to exploitation by landlords.

It is necessary to eliminate rich peasants and landlords and to confiscate their surplus. It is also necessary to confiscate all property belonging to the landlords. But even landlords vary. Those landlords who voluntarily give up their property should not be subject to the judgment of mass meetings and should be given enough to maintain peasant status. Those who do not give up their property voluntarily should be ruthlessly destroyed.

Commerce and industry should be protected. Commerce and industry of bureaucratic capitalist and despotic counter-revolutionary elements should be confiscated but should continue to operate. Industrial capitalism must exist for some time due to the backwardness of Chinese economy. Commerce in itself produces nothing of value, but it must be used for the benefit of the people rather than for the purposes of the distributor.

The majority of intellectuals come from the upper classes. Theirs is mental labor and they should be protected. Most of them are against Chiang Kai-shek and the United States and can be won over to the revolutionary movement. Even more so is this true of students.

Indiscriminate violence and killing must be stopped. Capital punishment should be applied only as punishment for the gravest of crimes, and then in courts of law. The righteous and justified indignation of the masses, however, must not be stopped, or they will be alienated.

2. Chen Po-ta. There has been a great voluntary step-up in Communist production—much to the amazement of the bourgeoisie. Certain changes, however, must be made. (1) Wages are becoming so high that products are not marketable and too great a subsidy is necessary. This is a false protection of the workers’ rights. “Equal compensation” is equally bad. Special compensations and money rewards for meritorious production are needed. The workers themselves should be consulted on what are proper rewards and punishments. (2) Industry produces more than commerce and should, therefore, be given greater favors, such as lighter taxes. Luxury items should be more heavily taxed than essentials. Multilateral taxes should be replaced by a single tax.

3. Mao Tze-tung. In the Shansi Suiyuan Liberated Area the agrarian and Party purification as well as the reorganization during the past year have been successful. Rightist tendencies have been exposed and corrected. The Party has also corrected the following Leftist deviations: (1) The improper delineation of classes and the exclusion of too many individuals. (2) Encroaching too much on commerce and industry. (3) Too much violence. These mistakes have been corrected by proper reference to local conditions. Correction is best obtained through representative councils of the people.

Another mistake has been the failure to recognize that differences exist between various liberated areas and yielding too much to the wishes of the masses who must be taught to think correctly.

Party work during the anti-Japanese war was basically correct, but its mistakes must now be corrected. The main objective now must be to increase production by renewed agrarian reform and purification of the Party. In this work the only leaders must be the proletariat and the Chinese Communist Party. The enemies to be overthrown are imperialism, feudalism, and bureaucratic capitalism. All three can be summed up in Chiang Kai-shek’s Kuomintang. The demands of the masses must be satisfied. The theory of destroying industry and commerce and of the equality of compensation is reactionary. The only target is the destruction of the feudal system of exploitation. Therefore, not more than eight per cent of the population must be destroyed. This must be done gradually, depending on the development of the particular area. (End Summary of Articles).

Although these three articles deal with three different topics, it is apparent from a careful reading of them that all three were prompted by the same basic change in tactics and strategy. This is not to say, however, that there has been any change in the basic policy and ultimate objective, namely, the communization of all China. What these pronouncements seem to indicate is that the Chinese Communists, probably for good and sufficient reasons, have found it desirable and probably even necessary to enter a period of retrenchment and consolidation induced in all likelihood by a realization that certain phases of the Communist program have been proceeding too rapidly for the overall good of the movement. Sitting as we do on the Nationalist side of the Chinese civil war where we come in daily and painful contact with the frustrations and imperfections of the Nationalist war effort, and being able to observe the steady and often-times unnecessary deterioration in the Nationalist war position, while at the same time we view from afar what appears to be at times an uninterrupted succession of Communist victories, it is altogether too easy to fall into the pattern of thinking that the Nationalist Government has the monopoly on problems in China and the Communists are blessed by an absence of them. In such a contest we too often forget that the Communists in areas that they control, must face much the same problems which confront Nanking, and which arise from the uncompleted Chinese social revolution. These three pronouncements would most assuredly seem to indicate that the Communists too realize that they have problems and must do something about them.

During last fall and winter the Embassy received numerous reports which suggested that the Communists in North China and Shantung had entered a period of ruthless repression and unbridled violence against all elements who, by any stretch of the imagination, might be considered as opposition or potentially so. It would now seem that the policy boomeranged on the Communists to a disconcerting degree and that they have now, therefore, found it desirable to loosen their restrictions and to attempt conciliation of a broader mass of people. The Communists are, after all, a long, long way from having achieved the final victory in China and that victory could be made infinitely more difficult if they had to cope with disaffection in the ranks and at the rear. There is no evidence available to the Embassy to indicate whether a similar process has taken place in Manchuria. It seems not unlikely that the course of events there has been somewhat different since hostilities and the upheaval resulting therefrom have been confined to a relatively small corridor leading from Changchun down through Mukden and Chinchow to the Great Wall. In Manchuria it may have been possible to proceed with communization more rapidly and at the same time seal it off more effectively from the outside world.

The second point which stands out in these three pronouncements is the present necessity for widespread land reform, without which no political movement in China can hope to command mass support. The politics of the rice bowl are just as demanding on the Communists as they are on the Nationalist Government. It is difficult to estimate whether the Communists really believe that a more or less equal distribution of land will provide a lasting solution for the land problem of China. In no area has it been possible for them to give the individual farmer a sufficiently large portion of land to ensure much more than a bare subsistence livelihood. Land distribution system schemes have plagued the world for untold generations and so far there is no recorded instance where a mere redistribution has provided more than a temporary relief which has always been followed in time by a gravitation of land again into the hands of the few more resourceful or unscrupulous members of society. During recent years studies of the land problem in China have invariably put the emphasis on distribution, on increased production, and on various techniques to be used. This reduces the problem to essentially a technical and scientific level. Granted that these aspects are fundamental to the problem, we would suggest the possibility that the primary consideration should be political rather than technical in the sense that the greatest urgency is to ensure that the peasant receives a larger proportion of his gross income, rather than merely increasing his production. Elimination of the large landowners and reform of nefarious system of collecting not only exorbitant taxes but also taxes sometimes decades in advance, is a step in the right direction. Whether the Communists are merely eliminating one exploiter and substituting themselves in his place is another question. The elimination of the present exploiter is calculated to secure allegiance on a temporary basis. Reassuring the intensely individualistic Chinese peasant that what is his will remain his is also calculated to achieve the same result. It seems hardly likely, however, that the Chinese Communist will be content with this indefinitely or that they will not proceed with the collectivization of land when they feel that conditions will permit it.

Another point which attracts attention is the lure thrown out to commercial and industrial groups. Chinese Communist experience to date has been almost exclusively in agrarian problems with the exception of Manchuria where the results of their urban experiences are largely unknown. Sooner or later there must come a day when the Communists, if they are to achieve final victory, must take over the urban and industrial centers of China and they must run them with a certain minimum of success. To do this they will desperately need the skill and experience of those who are presently running such enterprises until they have time themselves to accumulate experience and have developed trained personnel of their own. This they can hardly expect to do unless they have at least the passive acceptance of their rule. It is not inconceivable that Chinese Communist planning foresees the necessity of taking urban centers in the relatively near future and that they are now preparing for that eventuality, or that, it may already have embarked on it during the last two months.

The above suggests that there may be certain parallels between the situation in China today and that obtaining in the Soviet Union during the latter stages of the civil war and the NEP period¹³ when the Soviet Government, for reasons of survival, felt compelled to make very considerable tactical concessions in order to consolidate its position firmly before proceeding with its eventual plans. It will be recalled that during that period much opinion believed the Soviets had realized the folly of their ways and through the bitterness of experience had become tempered and more moderate in their objectives. The falsity of these suppositions should be a warning for China. This warning should be all the more important for China which in its present distraught, impoverished and ruined condition is all the more susceptible to any kind of offering which might seem to promise peace and relief from an intolerable economic situation.

From the standpoint of the United States, the most important conclusion to be drawn from these three pronouncements is their timing. It seems hardly possible that it should be only a coincidence that the announcements of a softening of policy should come precisely at a time when the Soviet drive throughout the world is suffering serious defeats and when there is evidence that Soviet propaganda is being modified to appeal to non-Communist middle and left-wing groups. The groups which the Chinese Communists are trying to conciliate in China are precisely those whom the Soviets have tried to seduce throughout the world with the principal objective of throwing the United States off balance and luring it into a false sense of security. Prominent Communist leaders in Hongkong recently told one well-known and usually reliable American newspaper man that the Chinese Communists were finding it necessary to proceed more slowly and that their timetable of military operations would take longer than had previously been planned. A revision of this timetable would have the double advantage of enabling the Communists to effect a necessary consolidation of what they already hold and at the same time provide a plausible appeal to disaffected elements throughout the country. The risk involved is, of course, that in this longer period of grace the Nationalist Government will find within itself new strength and that American assistance will help to make that strength effective.

Respectfully yours,

For the Ambassador:

Lewis Clark

Minister-Counselor

12. None printed.
13. The New Economic Policy (NEP) was introduced by Vladimir Ilyich Lenin during 1921 as a strategic retreat following failure of the economic policies of “war” (or militant) communism. Certain concessions were granted to economic principles theoretically condemned by leaders of the Bolshevik Revolution. This period lasted until 1928, when the first Five-Year Plan was adopted.