893.032/6–2548
The Ambassador in China (Stuart) to the Secretary of State
[Received July 13.]
Sir: I have the honor to submit the enclosed full translation of Premier Wong Wen-hao’s administrative report to the Legislative Yuan, delivered on June 12, 1948.47
The Premier gives first place and first importance to the task of [Page 319] “rebellion suppression”. He would improve morale by better subsistence and firmer discipline among regular troops; and by treating new conscripts and their families fairly, he hopes to improve recruiting. Local and provincial levies are to be better paid, armed, and trained. The command and planning must be integrated in itself and coordinated with political and economic measures. The military budget is to be divided into ordinary and extraordinary expenditures, with the cost of bandit suppression falling under the latter. The government promises to furnish necessary supplies of clothing and food, though the difficulties of supplying military rations when food is scarce are recognized. In order to handle this fairly and efficiently, local administrations must be strengthened at every level, by careful selection of personnel and higher pay; and the whole problem of local autonomy, how to secure it, and how to control it, should be studied by the government.
Finance is another key problem. Budgets are in preparation for the next six months. But the key effort is that to avoid inflation and to enforce the necessary taxes in such a way as to secure revenue adequate to the great expenses of civil war, while not imposing further hardships on the people. This difficult task depends upon the regulations set up by the Legislative Yuan. While the war lasts, a “soak-the-rich” policy should be maintained, through conscientious and effective enforcement of property, inheritance, and income taxes. The entire tax-collection system must be reformed towards efficiency, and tax rates must be realistically geared to commodity prices and people’s ability to pay. In expenditures, an atmosphere of austerity and purpose must be achieved, cutting unnecessary costs and spending effectively for the bandit-suppression effort. In this regard, government employees can be pruned, and all departments should reconsider their personnel requirements. A basic currency reform must be carried out; government bonds must be revised and really circulated; idle capital must be used; and American aid must be effectively channeled. The cooperation of the Legislative Yuan is especially asked in three key measures: control of finance and foreign exchange, control of imports and exports, and stabilization of commodity prices. Exports must be encouraged, remittances from abroad must be allowed at a favorable rate, smuggling must be banned to conserve capital, necessities must be supplied in adequate quantity, communications must be improved, and both rural and industrial production must be increased.
Even in the Northeast, where the Communists are interfering with efforts to reconstruct the nation’s industries and communications, production must be continued and improved. But a strong base must also be built in the south and west, so that rebellion suppression can proceed to the north.
[Page 320]Ownership of land must be equalized and measures for reform of land taxes must be continued. The real enforcement of such measures must be a primary aim, especially in pacification areas. The Communists have been using, as a propaganda weapon against the government, a land-reform principle which the government invented; and their application of it is known to be ruthless. The government’s measures are single-mindedly devoted to assisting the farmer.
Agriculture must be rehabilitated, to improve products for export purposes and to meet the present domestic food shortage. Better irrigation, better fertilizers, better production methods, agricultural machinery and the expansion of cooperatives will be the necessary measures. In areas flooded by the Yellow River, rapid relief must reclaim the inundated land.
The Three People’s Principles must be made the basis of the nation’s advance, through: equalization of land ownership, control of private capital, and the fostering of state-owned productive and communications enterprises.
In international relations, China is committed to 1) seeking a stable peace through sincere support of the United Nations; 2) friendly relations with ail nations of the world, but especially America; 3) no vindictiveness towards Japan, though she must be prevented from reviving as an aggressor; 4) friendly relations with all Far Eastern nations, so that Chinese can work peaceably in them. Hope is specifically expressed that India, a new and rich nation, will join in striving towards world peace.
America has granted aid to China both in materials and finances; and this must be effectively coordinated with China’s own self-help program, both for the nation’s benefit and to show her appreciation of the assistance.
In education and culture, efforts must be made to direct work towards the real needs of society. Especially since the Communists have so energetically sought to implant their doctrine in young minds, educational authorities should guide their students carefully and properly. Fifteen percent of the national budget will be for educational work.
To meet the needs of relief, administration, reform, and rebellion suppression, the Legislative and Executive Yuans must work together honestly and hard, to solve the difficult predicament of the nation.
It will be noted that the policies advanced by the Premier are general in nature, that he offers little or nothing new in the way of a program for improvement of conditions and that he promises nothing in the way of solid achievement. In the debate following his statement, he was vigorously, and also impolitely attacked on just these grounds. However, his critics had no more specific policies to offer, [Page 321] and it is generally conceded that their criticism is to be construed as an attack on the Generalissimo, who is blamed by the Legislative Yuan, as well as by others, for the evil state of affairs into which the country has fallen.
The failure of the Legislative Yuan to do little other than offer destructive criticism, and the failure of the executive branch of the Government to come forward at this time with a positive, concrete program capable of attracting popular enthusiasm and support, does not promise any great successes for the new, constitutional Government. Whatever may have been the defects of the old Government, and these were many, it was, on occasion, capable of effective action. From a survey of its early endeavors, it appears that the new Government does not have this quality. The Premier’s policy statement, and its reception by the legislators, would seem to indicate that our earlier fears that government under the new Constitution would soon devolve into government by stalemate, or no government at all, were well-founded.
Respectfully yours,
Minister-Counselor
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