The Ambassador in China ( Stuart ) to the Secretary of State
[Received November 5—5:13 a. m.]
2097. We have had several discussions over the past 2 days with Chen Li-fu, Vice President of Executive [Legislative] Yuan, in connection with crisis in which Government finds itself as result of crumbling military and economic situation, as well as Cabinet’s efforts to resign. After reviewing past mistakes in military strategy and economic policy Dr. Chen said he was proposing to Generalissimo that (1) he issue a statement clarifying the character of the existing struggle in China, stressing that this is not a civil war but a war against Soviet Communism in the hope of inspiring the Chinese people to further resistance, (2) able generals be sent to the Hsuchow area to strengthen resistance of Government troops against possible Communist attack, (3) an effort be made to persuade US, UK, France and Netherlands to issue joint statement declaring they would not tolerate Communist domination in China, and (4) make frank approach to Americans, laying all cards on table, and ask for help.
In Chen’s view China has reached a crisis in development comparable to that experienced by young US Republic when Washington spent desperate winter at Valley Forge. Had it not been for the help of France young Republic might not have survived. If China cannot, at this stage, find its Lafayette in the US democratic government, China may not survive and he hopes we can find some way to help. Regarding Chinese policy toward US, Chen expressed view that his country was making mistake in trying to remain neutral between US and USSR; that China should devote her efforts toward close cooperation with US and cease trying to pacify Soviets and should recognize that all Communists are so directed and act accordingly. Should USSR maintain control of all China with its stupendous manpower through Communist government it would be terrific blow not only to China but to Asia and world at large.
On the economic side Chen emphasized the importance of developing South China. Hope for the future, he feels, lies in the holding of the military line in the north and west China. He concluded that the present situation of his country was desperate and that unless something was done promptly it might become irremediable.