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

No. 370

Sir: I have the honor to report some of the recent indications of Chinese Communist tendencies, thus supplementing previous comments. [Page 431] Before doing so I wish to express my appreciation of your explicit instructions in Department’s telegram no. 1164 of August 12, 1948 as to present American policy regarding a possible negotiated peace, including Communists in a coalition government, and regarding our mediation.

There is a noticeable change toward greater toleration in C. P.71 treatment of middle-class merchants, small-scale industrialists, landlords, etc., apparently in the hope of neutralizing the fears and hostility of these classes. It is doubtless purely tactical but it may prove quite effective when peace is so widely and eagerly desired. The same less brutally intolerant attitude applies to religious agencies though this is less uniform.

Opinions vary as to how closely the C. P. and various non-Communist groups are really working together to overthrow the National Government. That they have a common hatred of Chiang Kai-shek is their strongest, and with many of them about their only, bond. For instance, Li Chi-shen and his followers in Hong Kong could scarcely hope to succeed in their long projected revolt without some understanding with the C. P. The latter are apparently bidding for cooperation with all such dissident bodies in order to give the appearance of being a new, nation-wide Coalition Government. Once established they would of course dominate and these elements could be easily absorbed or liquidated. Reports from Hong Kong claim that this movement will be announced in the next few months somewhere in the so-called Liberated Area. On the other hand, there are hints that all is not going smoothly in these discussions, and that even the Democratic League is by no means united in its present attitude to the C. P. There is reason to believe that the C. P. itself, when actually ready to discuss peace, would prefer to do so with responsible Kuomintang leaders rather than with these weak and unrelated factions.

From a much more authentic source I have more recently learned that the C. P. are becoming somewhat interested in renewing the effort for a negotiated peace with the Kuomintang. The constant rumors of a schism, or at least of major divergences in outlook, between their Northeastern leaders and those within the Great Wall seem really to have some basis. Among the latter there is disagreement between those arguing for a peaceful solution and their opponents. I am told that Mao Tze-tung is being urged to make an authoritative decision. The same source states that the advocates of peace among them still desire American mediation. He reports that the C. P. are also feeling the economic consequences of the long-continued conflict, especially in shortage of food and other commodity goods.

[Page 432]

None of this news needs to be taken too seriously. The earlier suspicions and disputed points still hold and there are many fresh exacerbations. Without American assistance it is hard to imagine either side being willing to approach the other, and no third group has emerged of a type that both parties would respect. The disposition of troops would alone appear to be an insurmountable obstacle. There is, however, a growing impatience among the helpless populace with the continued hostilities and this may somehow organize itself in time.

There is perhaps a slight improvement for the Government in the military situation, though this is more in defensive maintenance than in much aggressive action. The new monetary measures, if successfully carried through, may help the morale of officers and soldiers, as well as prove beneficial in more immediately economic and civilian affairs. But if these fail the outlook for the present Government will be much more gloomy than before the decision was announced.

Should the present attempt to find a peaceful solution, which is certainly in the minds of some C. P. members, result in any concrete proposals there would quite probably be an approach to me. From their point-of-view I am still regarded as more or less liberal or friendly and as having been left here as a sort of symbol of American readiness to assist again in the former mediation effort should both parties request it. If this happens I shall try to be discreet in carrying out your latest instructions.

Respectfully yours,

J. Leighton Stuart
  1. Communist Party.