Nanking Embassy Files, Lot F–84—800 China

The Minister-Counselor of Embassy in China (Clark) to the Director of the Office of Far Eastern Affairs (Butterworth)

Dear Walt: Within the past few weeks, the Government’s military power and economic position have so deteriorated that we seriously question its ability to survive for long. There is just no will to fight in Nationalist Government armies and in high official circles there is only befuddlement. We have reported on the various crises that the Government has had to face, and for that matter still faces, and there is no need to recount them here. It will suffice to say that at no time has the Government been able to devise measures adequate and suitable to the tasks confronting it, and that most of the measures adopted have actually operated to the Government’s detriment. There is little or no confidence in official Chinese circles that the Gimo has mustered, or can muster, the resources needed to rescue his regime. While there are some in the Government who say that increased American assistance can still save the day, we are inclined to believe that most of those who take this line are not, in fact, convinced that any practicable amount of aid can save them. The departure of the Gimo has been mooted in the Legislative Yuan, and peace has been advocated editorially in the Tientsin vernacular press. These sentiments are widely, if not generally, held, and it cannot be long before further military and economic debacles and their translation into effective political action.

Precisely when and exactly how the present Government will go is impossible to foretell. There are so many imponderables involved that no firm prediction can be made. However, when it goes there must be sooner or later a new government for China, and this must be either wholly Communist in character, or one in which the Communists play a leading role. There will very likely be certain sections of the country that will hold aloof for the time being to see how the wind blows. Nevertheless, it appears at the moment that the new “Central” Government will result from an association of the Communists with the minority parties and a segment of the Kmt. In this case the degree of control which the Communists exercise will always be enough to insure that their opponents cannot combine to eliminate them by force. Actually, the extent of this control is virtually at their pleasure, for they can very likely maintain the preponderance of military power which they now hold and so enforce their will against their opponents. Thus, insofar as the opposition cannot, through the foreseeable future, develop the military potential needed for a counter revolution, the new government must be very much what the Communists choose to make it.

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If there is one thing certain in this situation, it is that the problems facing the new government will be of an almost indescribable magnitude. The native agrarian economy is in grave crisis, and that segment of the national economy organized along Western lines is in an equally serious plight. At almost all levels political institutions no longer function as they were intended to, so that a state of loosely controlled anarchy obtains. Only a part of the general chaos is directly attributable to the civil war; many of the crises stem from the deeper contradictions of Chinese society. We can assume that the new government will soon succeed in ending civil strife, though conflict may continue briefly in peripheral areas and may flare up anew from time to time. We can also assume that the new government will display more administrative ability and that it will, at least in initial stages, have a higher degree of probity than the present regime. From these assumptions we may expect it to make some substantial progress in solving those problems which are the products of civil war and bad government, and so contribute to its own stability.

We have often pointed out just how the present Government has been wont to do those things it ought not to do, and to leave undone those things it ought to do, and how, in so doing and not doing, it was bringing on its own downfall. The main problem facing the new government is to do those things it ought to do in meeting the minimum requirements any government must provide for those it rules. Here we may fairly question whether the new government has this capacity, and from all indications it would appear that the answer is in the negative. Briefly, the basic problem of the new government will be the ordering of the national economy so as to insure a livelihood to all, and at the same time acquire from the nation’s production a surplus for its own support. This involves the rehabilitation of the national economy—not only in terms of repair and replacement to physical plant—but also reconstruction of economic institutions, and it involves the reorganization of the economy in terms of a new economic and social philosophy which is altogether an import and has no real roots in the country. To do these things, the new government will need a feasible program, good administrative personnel, and it will need, above all, materiel. Whether its program is feasible remains to be seen. It is certainly true that it has not worked too well in the agrarian areas which the Communists have held. It may work on a national scale if sufficiently amended, but deep and vital changes will be difficult without doing violence to the Communists’ basic, underlying dogma. Good administrative personnel they lack, as do the Nationalists. Indeed, effective, trained administrators are in short supply throughout China. The material most needed are capital goods which cannot be produced within the country and must be imported. [Page 554] There is little prospect in the foreseeable future that, however and by whomever managed, the national economy can produce a surplus, over and above the requirements of the State for its own maintenance, to pay for the imports needed.

The difficulties we mention, while basic, are only a few of the many that will arise. However, on a short term basis the prospects are that a new government will achieve some success, and will gain a considerable measure of popular support. For one thing, it will have brought about an end to the civil war, the consummation devoutly to be wished as far as most Chinese are concerned, regardless of the manner of its coming. Also, it will at the outset likely be able to do certain things of benefit to the masses, which any “good” government could do. Indeed, it may well, over a considerable period of time, be regarded by the body politic as a vast change for the better. But as it must come to grips with its fundamental problems, its chances of giving a satisfactory performance diminish.

In brief, the Communists’ main problem is the creation of economic stability, and it is difficult to see how they can do this in any permanent way without outside help. As matters now stand, we are virtually the only source from which help can be obtained. The Communists well know that any aid from us will be contingent on specific political performances which we require of them. In the North Shensi radio broadcast of October 30 (see our telegram 2056 of November 2)58 they clearly demonstrate their awareness of the seductive power of our aid on the non-Communist membership of a coalition, and in so doing they admit by implication that it may be equally seductive to themselves. The broadcast takes great pains to warn their present and potential associates that the Americans will try to secure their defection through “intelligence” and secret police methods, and that we will “organize and give financial backing to ‘centre parties and groups’ and (attempt to) split and destroy national movements.” This certainly suggests that they will watch their non-Communist colleagues assiduously. The question is, however, how long they can avoid reacting to the popular appeal that the possibility of American aid must continue to have, since economic rehabilitation without aid is all but impossible.

Given this situation, our position will be a difficult one. With the emergence of a Communist-dominated National Government, we will have, in a very real sense, lost the cold war in this part of the world. We will have to proceed on a day-to-day basis with as flexible a policy as possible. We should, we believe, promptly suspend our commodity exportations under the China Aid Program—or any part of it remaining—and announce that in light of developments we were reviewing [Page 555] the entire Program. It might develop later that by the wise use of the power given us by Chinese economic needs we could influence, if no longer the Government, perhaps in some degree the pattern of events. If the new Government were so organized that a considerable degree of autonomy accrued to provincial administrations, it might be possible to favor those autonomous areas remaining relatively free from Communist influence and there might be other small ways in which we could influence events.

Our foregoing comments concern the longer view, rather than the immediate future. As we say, what will come in the next several months, or even weeks, is almost impossible to predict. The fall of Mukden, which occurs as this is written, is likely the beginning of the final series of military debacles for Nationalist arms. At the moment it appears that the isolation of Hsuchou has begun. In this situation, of all the Government there are few, if any, save the Gimo who even profess confidence that the tide may yet be turned. Only a few days before Mukden fell, the Government had five well equipped, supplied and trained armies in the Manchurian field, the most formidable striking force at its command, and within a few days these armies were lost. They were lost not from battle casualties, but from defection, although among their commanders were numbered officers long associated with the Gimo, and in whose loyalty he trusted implicitly. The troops at Hsuchou are far inferior to the former Mukden garrison, and their commanders are already resigned to defeat. There is no reason to believe in their will or ability to resist an offensive. And when they are gone, Nanking has no defenses worthy of the name.

It is not difficult to see why the Gimo retains some confidence in his star. His beginnings were modest, and from them, against great odds, he led a revolution and was the principal architect of a new state. For a time his government was successful. More than that he was able to maintain it through the eight years of his war with Japan and in the end to regain the territories that he had lost. His achievements are by no means inconsiderable, and they testify to his qualities. There is a tendency on our part to forget that Chiang succeeded as a revolutionary, and that he still regards his party as a revolutionary party. It was his fate that there should develop in China another revolution in competition with his own, and that, in the broader view, the Kmt has become to the Communist revolution what the old, war-lord regimes were to Chiang as he rose to power. The Gimo does not understand this, and so, to some extent, he regards himself as the protagonist of a revolution, which must in the end succeed because all men must recognize that it is essentially right. To that extent he must regard his triumph as inevitable and his reverses as but setbacks incidental to the temporary perversion of natural order. These are, in general, the reasons which constrain him to [Page 556] continue the struggle when it has become apparent that it is a lost cause.

There appears no reason to believe that the Gimo has, or will consider, a negotiated peace with the Communists, even should they agree to deal with him. This intransigence will prolong the conflict as long as there are any who will stand by him. It remains to be seen how many of his followers will remain when the news of Mukden becomes generally known. Their members will be appreciably less when the assault on Hsuchou begins. Whether he will have enough of a following to attempt a defense of Nanking is problematical, even doubtful, but it seems clear that once he has left Nanking in flight, he will never again be a really effective political force in this country.

Very sincerely yours,

Lewis Clark
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