Policy Planning Staff Files, Lot 54D195

Memorandum by the Policy Planning Staff11

PPS 39

The Problem

To Review and Define United States Policy Toward China.

Analysis

[Here follows general survey of demographic, economic, military, and political conditions in China and of developments since the surrender of Japan.]

[Page 147]

The Kremlin and China

Before analyzing Soviet objectives and strategy with respect to China, it would be useful to attempt an appraisal of that country from the point of view of the Kremlin.

In economic terms the Kremlin is certainly covetous of Manchuria’s, and to a lesser degree, North China’s, natural resources, both to deny them to Japan and to develop the Soviet Far East. As for the bulk of China proper, the Kremlin is hardly likely to view it other than as a vast poorhouse, responsibility for which is to be avoided.

Nor is there any reason to believe that the unromantic men in the Kremlin cherish any illusions regarding China’s power potential; in any war in the foreseeable future China could at best be a weak ally or at worst an inconsequential enemy. Under certain conditions, however, parts of China, specifically Manchuria and Sinkiang, might serve as an avenue of attack on the USSR by a third power. The Kremlin, extremely sensitive about its land borders, must therefore regard Manchuria and Sinkiang as gaps in its buffer defense zone.

But it is the political situation in China which must arouse the aggressive interest of the Kremlin. In the struggle for world domination—a struggle which the Kremlin pursues essentially through political action (even in civil war)—the allegiance of China’s millions is worth striving for. That allegiance is worth struggling for if only to deny it to the free world. In positive terms, China is worth having because capture of it would represent an impressive political victory and, more practically, acquisition of a broad human glacis from which to mount a political offensive against the rest of East Asia.

The Kremlin’s objective with respect to China, therefore, is to expand its influence there and eventually to control all of the territory comprising China.

In pursuit of this objective the Kremlin’s strategy is to (1) disrupt and then liquidate all active opposition to the expansion of communism and (2) bring under as tight control as possible all native communist elements and their collaborators. In seeking to defeat opposition, two of the most powerful indigenous political forces in China are employed: the sentiment of nationalism (anti-imperialism) is used against foreign opposition and the urge towards reform and a new order is used against native opposition—the National Government. And because one of the cardinal lines of attack is anti-imperialism, the USSR has been extremely careful to avoid any appearance of overt intervention; it has relied on indigenous elements, the Chinese Communists and affiliated groups, to carry on the fight.

The process of bringing the Chinese Communists and their collaborators under Kremlin control has already begun. It has been done, [Page 148]in at least one case—that of Li Li-san—by introducing a presumed Stalinist into a position of power. It is also being done by a reduction in the size of the territory answerable to the Communists in China proper. This is a bolshevik adaptation of the classic doctrine of divide and rule. There are indications that at least western and northern Manchuria and Sinkiang are intended to be separatist regimes answerable directly to Moscow (thus, at the same time, filling the gaps in the Soviet buffer defense zone). Furthermore the Chinese Communists have been denied overlordship over certain Manchurian Mongols, but permitted so far a communist suzerainty over Jehol Mongols.

It may be asked why such precautions are necessary if, as we are sometimes told, all communist parties—including the Chinese—obediently follow Moscow directives and are abject tools of the Kremlin. The answer is that Stalin and his Politbureau confreres do not have much faith in human nature. Their inclination towards cynicism is confirmed by experience—from the very process through which each of them came to power to the edifying truancy of comrade Tito. It is quite true that a common body of ideology is a strong bond; but to the old conspirators of the Kremlin the questions to ask about any foreign communist party are: who controls the party apparatus; who controls the secret police; who controls (if they exist) the armed forces; and does the foreign leader love power more than he fears the Kremlin?

If the answers to these questions as applied to China are as unsatisfactory to the Kremlin as they turned out to be in the case of Yugoslavia, Moscow faces a considerable task in seeking to bring the Chinese Communists under its complete control, if for no other reason than that Mao Tse-tung12 has been entrenched in power for nearly ten times the length of time that Tito has.

If on the other hand all elements of the Chinese Communist machine are Kremlin-controlled and Mao is now fearfully loyal, Moscow still cannot be satisfied with the situation. China is too big, too populous. Even Mao and his colleagues cannot be permitted eventually to acquire all of it—the temptation might be too great for them, especially as they would have, in part, risen to power on the heady wine of nationalism. The Kremlin prefers, where possible, not to take chances in such matters.

Finally, it may be said that the primary concern of the Kremlin with regard to China is not how the Chinese Communists can be helped to defeat opposition, to win the civil war—they are doing about as well as could be expected on that score—but how to ensure complete and lasting control over them and their collaborators. No one is more [Page 149]keenly aware than the Kremlin of the skill, subtlety and patience necessary to accomplish this. Still green in the Kremlin’s memory is its own inept 1927 venture in open intervention, its impetuous masterminding of an Asiatic revolution from Moscow, only to have the revolution “betrayed” by an intimate collaborator—Chiang Kai-shek.

The American Bole in China

For a century American interest in China has been motivated mostly by trade and idealism. Our idealism has manifested itself in evangelism, advocacy of the American way of life and sympathy for China as a perennial international under-dog.

This approach to China finds its reflection in diplomatic notes, treaties and statements of policy. Secretary Hay formulated at the turn of the century the American principles of equal commercial opportunity in China and international respect for the territorial and administrative integrity of that country. These basic principles were restated and elaborated in subsequent years, most notably in the Nine Power Treaty of 1922.13

While traditional American policy did more than is perhaps generally realized to preserve China from classic imperialism, both as a market and as a recognizable geographical expression, it fell far short of achieving its aims. This was so because fundamentally the American estimate of China varied from Chinese realities. With its marginal standard of living, China was not the fabulous potential market that American traders thought it was; in the 1930’s our trade with that country was about 4 percent of our total foreign trade.

Nor did China quite fulfill the expectations which flowed from our idealism. The essentially unreligious Chinese proved to be comparatively indifferent to Christian proselytization; the American way of life, with all that it ideologically and materially implied, never became comprehensible, desirable or attainable to more than a minute fraction of the Chinese population; and China failed to develop sufficient unity and strength to defend its territorial and administrative integrity.

Chiang Kai-shek’s rise to power in 1925–28 and the establishment of the National Government promised to resolve the U. S. Government’s policy frustration, to relieve the U. S. Government from its false position of, what amounted to, almost sole responsibility for maintaining Chinese sovereignty. Here at least was a strong leader who seemed to have a progressive, modern outlook, who became converted to Christianity and who seemed to be capable of unifying his country and defending its sovereignty.

Unhappily Chiang succeeded neither in unifying nor in defending China. Japanese imperialism, communist rebellion and the failure of [Page 150]the National Government to solve China’s politico-economic problems thwarted the grand design.

It is perhaps not surprising that as Chiang’s fortunes declined the U.S. Government tended to commit itself more deeply to him, for we had come to equate Chiang with what we sought—a strong unified China. Therefore it was natural that in part as a gesture of faith in the future of the National Government this Government should have insisted in the depths of World War II that China should be accorded the position of one of the five Great Powers of the post-war world. It is also understandable that we should have continued to support Chiang in civil war long after it was evident that he could not win it.

This continuing exclusive commitment to Chiang is understandable, but it is not good diplomacy. It binds this Government to a single course, leaving it no alternative, no latitude for maneuver. This loss of initiative may not be fatal if the tide of events is running in one’s favor. In the present situation in China, however, the tide is against us and we need the freedom to tack, or perhaps even to lie at anchor until we are quite sure of our bearings.

Conclusions

The Distant Future

From the analysis in this paper of demographic and economic factors it is concluded that for years to come China will probably be plagued by (1) an implacable population pressure, which is likely to result in (2) a general standard of living around and below the subsistence level, which in turn will tend to cause (3) popular unrest, (4) economic backwardness, (5) cultural lag, and (6) an uncontrolled crude birth rate.

The political alternatives which this vicious cycle will permit for China’s future are chaos or authoritarianism. Democracy cannot take root in so harsh an environment.

Authoritarianism may be able to break the cycle by drastic means, such as forcible “socialization”. At best, such measures could be put into effect only at heavy and long protracted cost to the whole social structure; at worst they could provoke such rebellion as to recreate a state of chaos.

The Immediate Future

It follows from the analysis in preceding sections that the Kuomintang and the National Government have so declined in strength that they may be assumed to be on the verge of losing their long struggle with the Chinese Communists.

The question naturally arises: late as it is, might not the Kuomintang and National Government as now constituted yet save themselves and might not American aid reverse the course of the civil war? The [Page 151]answer to the first half of the question is, “No”; it began to be evident ten years ago and is now abundantly clear that the Chiang-Kuomintang-National Government combination lacks the political dynamism to win out. The answer to the second half of the question is “It might, but only if the U. S. would provide as much aid as was necessary for as long as was necessary”.

The aid which we have extended (Annex “A”) has been insufficient to check the communist advance, much less reverse its course. How much more aid would be needed is less likely to be a problem of arithmetic progression than one approaching geometric progression. “All-out aid” amounts to overt intervention. Overt intervention multiplies resistance to the intervener. The ramified forces of new nationalism and traditional Chinese xenophobia would be likely to rally to the Communists, whose ties with the USSR are obscured in Chinese eyes by the Communists’ violent anti-imperialism. Open U. S. intervention would, as it militarily strengthened Chiang, tend politically to strengthen the Communists. Thus, the more we openly intervened in the deep-rooted Chinese revolution, the more we would become politically involved, the more the National Government would tend to be regarded in Chinese eyes as a puppet—and thus discreditable, the greater our task would become, and the more the intervention would cost.

Eventually, assuming optimistically that the American people did not balk at the political and financial price, that the Communists were defeated on the field of battle and that the National Government was made supreme over a unified China—what then? Would we have ensured that the National Government would not promptly go to pieces on us again? What guarantee would we have that the revolution—the basic causes of which our action could not cure—would not begin all over again, and once more be exploited by the Kremlin? And when could we expect to get out from under the dreary load of political, military and financial responsibility for the National Government of China?

“All-out aid” to the National Government is therefore a course of action of huge, indefinite and hazardous proportions. The American Government cannot rightly gamble thus with American prestige and resources.

We then face up to the probability that the disappearance of the National Government as we now know it is only a matter of time. Just how that change will occur cannot be foreseen. It might be precipitated by any one or more of the following:

a.
The death, retirement or expulsion of Chiang Kai-shek;
b.
A coup d’état;
c.
The defection of important Government figures; [Page 152]
d.
The establishment of a separatist regime or regimes;
e.
A series of major Communist victories;
f.
The acceptance of Communist proposals for a coalition government.

However smoothly the change was effected, it would be followed by a confused and fluid situation, even if Vice President Li Tsung-jen quickly succeeded Chiang and the present structure of the National Government was generally maintained. Fighting might continue. More likely, a truce of exhaustion would ensue—for all of China passionately longs for peace. Whichever happens, a new struggle for power would immediately develop on the political plane.

The strongest element in this contest, at least initially, would obviously be the Communists. Other elements would be: certain nationalist military commanders, such as Fu Tso-yi; former provincial war lords, such as Lung Yun; the Kwangsi clique; the Northeastern (Manchurian) faction; the Kuomintang Reform group centered around Li Chi-shen and not a few of the political leaders now prominently associated with the National Government.

It should not be assumed that in such a struggle the non-communist forces would necessarily remain fragmented. That, of course, could happen. But it is perhaps more likely that the centrifugal forces would be overbalanced by those, particularly continuing Communist pressure, which tended to draw most of the non-communist groups together.

Nor should it be taken for granted that the non-communist elements would rapidly succumb to the Communists. They might, of course. But some of them, particularly Fu Tso-yi and the Moslems of Ninghsia and Kansu, with little or no help from Nanking, have shown on a local scale a capacity for coping with the Communists. If these elements band together under capable leadership they might do better than the National Government in holding their ground. Whether they could drive the Communists back is another and larger question.

As for the Communists, the collapse of the National Government would not signalize the end of their troubles, even if they got what they want—a national coalition government. The civil war might, as has been indicated, continue. But that would be a familiar problem in dealing with which they have become highly skilled.

The real trouble which lies in store for the Communists would come with a cessation of hostilities when they would come up against the problems of peacetime government whether over all or part of China. They might not immediately run into all of those problems, but sooner or later they would, if they survived, be confronted by all.

The first problem which they would have to solve in a stabilized situation is a relatively simple one—administration. It is generally [Page 153]accepted that the Communists lack personnel experienced in national, provincial and urban administration. Their government, even if large numbers of practiced administrators were recruited from outside their own ranks, would likely be inefficient in every respect save political surveillance and punishment. At worst, however, it could scarcely be more inefficient than the present National Government.

Far more serious would be the complex of problems arising from the conflict between their ideology and Chinese realities. Being Marxists the Communists are under intellectual compulsion through socialism to collectivize and industrialize. But it is questionable whether China has, as the USSR did and still does, the demographic and economic elbow-room to succeed in so extravagant an enterprise. Nor is a communist China likely to be helped along by large investments from abroad, least of all from capital-poor Russia. Socialization would then encounter at a minimum the passive drag and sly resistance of Chinese individualism and at a maximum disruptive social revolt.

Now, Mao Tse-tung, who is an exceedingly shrewd judge of his fellow Chinese, might be persuaded of the desirability if not inevitability of gradualness. He might decide that China should socialize slowly. If he did that his movement would run the risk of losing the vitality it now possesses by reason of ideological zeal. It would run the risk of becoming another Kuomintang baffled by and bogged down in China’s troubles.

Finally, nationalism would probably prove to be a thorny problem for the Communists. Having risen to power on, in part, a groundswell of nationalism, not only their collaborators but the party members themselves have been infected with Chinese patriotism. So long as they fought, with Soviet support, first against Japan and then against Chiang they could equate nationalism with loyalty to the USSR; there appeared to be identity of interest. But if and when the fighting stops the mantle of rationalization falls to the ground and the ties between the Kremlin and the Chinese Politburo are likely, perhaps suddenly, perhaps gradually, to be revealed for what they are. And if the Chinese Politburo is revealed as subservient in any way to the Kremlin, the Chinese Communist leadership is in for difficulties from the powerful sentiments of nationalism and xenophobia, on the part of both the Chinese public and nationalist elements in the party.

It is a nice piece of irony that at precisely the time the Chinese Communist leadership is most likely to wish to conceal its ties from Moscow, the Kremlin is most likely to be exerting utmost pressure to bring the Chinese Communists under complete control. The possibilities [Page 154]which such a situation would present us, provided we have regained freedom of action, need scarcely be spelled out.

This brings us to conclusions which may be drawn regarding our role in China.

U. S. Policy

The traditional American aims with respect to China—(a) international respect for the territorial and administrative integrity of China, (b) equal opportunity, and (c) encouraging the development of a friendly and unified China—may be accepted as an expression of our long-range aspirations.

Given the realities of the situation in China and the limitations on our own capabilities, it is evident that our traditional aims are not now and will not be for some time to come susceptible of achievement. We therefore need for the foreseeable future a policy which can serve as a pragmatic guide through the Chinese maze.

It would, however, be misleading at this stage to attempt any detailed charting of a course to be followed for the next several years. The current situation is so chaotic and that which would follow the disappearance of the present National Government would be so fluid that any definite prescription for action would be bogus. Until the world situation is much clearer, particularly with respect to the USSR and China, our policy for the immediate future must be defined in the most flexible and elementary terms. For the foreseeable future, therefore, U. S. policy toward China should be:

a.
to continue to recognize the National Government as now constituted;
b.
with the disappearance of the National Government as we now know it, to make our decision regarding recognition in the light of circumstances at the time;
c.
to prevent so far as is possible China’s becoming an adjunct of Soviet politico-military power.

Principles Governing U. S. Tactics

In the implementation of the foregoing policy, we should bear in mind the following principles, which should govern our tactics.

We must realize that there are operating in China tremendous, deep-flowing indigenous forces which are beyond our power to control. We must therefore accept the fact that there are considerable limitations on what we can do to affect the course of events in China. If we undertake or are maneuvered into action counter to basic Chinese forces these limitations will multiply and we will tend to defeat ourselves; conversely if we act so as to take advantage of these natural forces our influence will be multiplied.

[Page 155]

Likewise, we must understand that the capabilities of the Kremlin to influence and utilize China for its overall purpose are severely qualified by the demographic, economic and political considerations discussed in this paper. It is impossible that the Kremlin could in the space of the next crucial five years mobilize China’s resources and manpower to the extent that they would constitute a serious threat to U. S. security. It remains to be proved that the Kremlin could, if it survives as a predatory international force, accomplish this over the long run. If Soviet imperialism does not survive, Chinese communism will be of minor security concern to us for it has potentially grave significance to us only as a possible adjunct of Soviet politico-military power.

It follows from the preceding two paragraphs that China’s destiny is largely in its own hands. The salvation or destruction of China lies essentially with the Chinese—not with foreigners.

In long-range planning for other countries of the Far East we must take into account that for some time to come China will be a chaotic and undependable factor on the Far Eastern scene.

Because China is unpredictable, we must not become irrevocably committed to any one course of action or any one faction in China and we must be willing to cut our losses when it becomes evident that any involvement is likely to prove to be a losing proposition.

We must place no reliance on the subjective attitude of any Chinese faction or government toward the U. S. Fear and favor always have and still do control fundamentally the attitude of foreign governments toward us, but only if expertly wielded.

If our strength is to be respected rather than scorned, it must be exercised in a form which is effective; it must not be dissipated by misapplication. There are four general forms in which our strength can be applied: military, economic, political and cultural. We must recognize that our military strength cannot be effectively applied excepting at prohibitive cost. The Kremlin has, by relying primarily on politico-cultural measures and avoiding overt intervention, enjoyed a phenomenal success in riding the ground-swell of the Chinese revolution. In the battle for the mind of China the most effective application of our strength will be through political, cultural and economic forms.

Economic favor becomes tribute if it continues to be given without exactions. While we must have favors in hand, in the shape of economic aid authorizations, for the post-Chiang situation, they must not be pre-committed. The Executive must have the flexibility to give or withhold fully or in part. Only thus will U. S. politico-economic influence be felt.

[Page 156]
[Annex A]

Partial Inventory of United States Government Economic and Military Aid to China Since V–J Day

I Lend-Lease

(including deliveries on 3 (c) credit terms)

[Page 158]
Purpose Classification Value
Ordnance and Ordnance Stores
Ammunition $94,297,895.91
Ordnance material  23,533,946.48
Sub-Total $117,831,842.34
Aircraft and Aeronautical Material
Aircraft $10,833,591.56
Aircraft engines, etc. 15,037,540.68
Accessories & other parts 6,676.52
General aeronautical supplies & facilities 6,745,608.30
Establishment & operation of depots for servicing aircraft 2,498.78
Modernization & reconditioning of completed aircraft 16.06
Cancellation & repossession liability 165.59
Training of personnel  10,308,233.28
Sub-Total $42,934,330.77
Tanks and Other Vehicles
Ordnance vehicles $200,408.30
Other than ordnance vehicles 67,530,227.77
Trucks 27,895,974.38
Misc. auto supplies, spare parts, etc. 334,289.12
Training of personnel    25,229.81
Sub-Total $95,986,129.38
Vessels and Equipment for Vessels
Equipage, services, supplies & materials $383,385.11
Freight forwarding 16,000.00
Rental & charter of vessels 9,648.333.33
Ocean transportation of personnel 732,800.00
Pilotage      848.13
Sub-Total $10,781,366.57
[Page 157]Miscellaneous Military Equipment, Supplies and Materials
Quartermaster equipment $50,673,078.87
Clothing 154,847.77
Equipage 5,312.78
Kitchen, mess & Field baking equipment 3,242.23
Fuel 572,728.04
Provisions 360,652.70
Miscellaneous quartermaster supplies 160,534.99
Medical equipment 6,285,432.87
Signal equipment 21,026,869.59
Chemical warfare equipment 10,656,523.99
Engineer equipment 9,292,133.30
Training personnel 587,705.39
General expense    141,686.78
Sub-Total $99,920,749.30
Facilities and Equipment
Acquisition of land and appurtenances $15,855.04
Machine tools for direct transfer    20,343.70
Sub-Total $36,198.74
Agricultural, Industrial and Other Commodities and Articles
Agricultural products & foodstuffs $250,183.41
Machine tools 453,211.87
Agricultural implements 2,268.00
Electrical equipment 3,510,757.26
Other machinery 1,362,695.80
Iron and steel 172,298.58
Copper & brass 965,924.44
Aluminum 13,909.26
Zinc 7,202.27
Other metals and alloys 1,769.16
Non-metallic minerals 19,908.62
Chemicals—other than nitrates & phosphates 36,059.20
Petroleum and coal products 100,342.65
Gasoline 17,083,493.44
Petroleum products other than gasoline 5,588,498.70
Rubber and rubber products 1,166,822.43
Textiles and clothing 5,906,910.15
Civilian medical supplies 21,947.02
All other commodities and articles not otherwise classified      71,197.31
Sub-Total $36,735,399.57
Servicing of Defense Articles
Vessels $465.95
Other defense articles      1,882.93
Sub-Total $2,338.88
Miscellaneous and Contingent Expenses
Miscellaneous services & expenses $322,133,387.36
Subsistence 87,329.12
Ocean transportation of personnel 8,204,466.00
Air transportation of personnel 4,343,129.50
Air cargo transportation 780,040.48
Cancellation and repossession liability 1,922,628.52
Other miscellaneous and contingent expenses 138,939.51
Hospitalization 72,167.15
Training of personnel      55,207.53
Sub-Total $337,737,295.17
Total of Lend Lease $741,965,650.72*

II Surplus Property

[Page 159]
Item Sales Price
A) Surplus and Excess Property Sales on Credit Terms
Excess stocks of US Army in West China $20,000,000
Dockyard equipment for Shanghai and Tsingtao 4,000,000
Maritime Commission ship sales
10 N–3 ships $4,300,000
10 Liberties & 8 N–3’s 9,300,000
8 Cl–M–Vl ships and
4 C1–S–AY1 ships 10,000,000
3 VC2–A–P2 ships 2,600,000
Total wartime procurement cost of 43 ships: $77,300,000
26,200,000§
B) Civilian Surplus Property in China, India, and on 17 Pacific Islands (Agreement of August 30, 1946) $175,000,000
Original cost of this property totalled $837 million. The sales price represents non-US dollar considerations, of which the equivalent of US $55 million is being repaid over time in Chinese currency. Of this total, vehicles of all kinds accounted for about one-third, construction equipment about one-sixth, and air force supplies and equipment about one-eighth. The remainder was composed principally of communication equipment, tools, shop equipment, industrial machinery, electrical equipment, medical equipment, and chemicals. As of July 31, 1948, the Chinese Government had taken title to over three-quarters of the total property involved in the bulk sale agreement. The Stillman Mission,14 however, recently reported that large stocks of surplus property are held idle in Chinese Government warehouses.
C) Military Equipment and Supplies Sold for US Dollar Payments
[Page 160]
Description Procurement Cost Sales Price
5848 metric tons and 2,561 long tons ammunition $6,486,201.15 $65,862.02
Military paraphernalia and equipment not available 1,590,231.84
Military equipment and paraphernalia   ”   ” 65,081.93
42 P–47–D aircraft and 53 P–51–B aircraft   ”   ” 544,500.00
255 aircraft engines   ”   ” 396,050.00
85 P–47–N aircraft 7,055,000.00 (approx.) 315,000.00
Ammunition (4,128.2 tons) declared surplus in Pacific, excluding that for 8⅓ Group Program (Sold at 1 cent on the dollar) not available not available
130 million rounds of 7.92 rifle ammunition 6,566,589.00 656,499.27
Ammunition (11,400 tons) and arms 11,753,697.80 119,330.98
Engine overhaul plant $1,360,937.47 $238,157.25
Arms and ammunition, including 1,036,918 rounds of small arms, ammunition and 200,000 grenades 842,727.50 81,247.34
Equipment for 8⅓ Group Program 3,600,250.82 630,043.89
Equipment for 8⅓ Group Program 37,106.19 12,059.51
Equipment for 8⅓ Group Program 705,486.48 229,283.12
13 C–46 aircraft plus parts and accessories 3,120,000.00 (approx) 292,500.00
Bombs and ammunition, including 2,484,647 rounds of small arms ammunition, 795,003 rounds of artillery ammunition, 60,213 mines, and 29,392 grenades 6,154,795.37 464,351.17
12,128 tons of aviation equipment under 8⅓ Group Program 7,759,214.57 969,901.85
3,949 tons of ammunition 1,876,775.00 18,767.75
1,500,000 units cal 50 ammunition 225,000.00 2,250.00
Links for 50 cal ammunition 25,300.00 253.00

III Naval Aid

A) Sino-American Cooperative Organization Agreement15

Item Amount
Payment of lump sum of expenses of training 40 Chinese students as obligated by article 17, SACO Agreement $200,000.00
Equipage, shore bases 585,045.18
Public-works construction and maintenance 79,304.37
Ordnance supplies and equipment 14,284,067.80
Communications 14,746.58
Clothing 2,309.60
Radio equipment and supplies 1,320,664.26
Fiscal codes, aerology 957,782.27
Medical equipment 159,493.57
Aviation supplies and materials 67.25
Furniture and fixtures   63,448.82
Total estimated value of issues, VJ–Day to March 2, 1946 $17,666.929.70
[Page 161]

B) Transfer of US Naval Vessels under Public Law 512 (grant)

[Here follows list of 126 vessels.]

Total procurement cost of above 126 vessels: $129,565,000. Four additional vessels with a total procurement cost of $17,600,000 are scheduled to be transferred by January 1, 1949.

IV Relief Grants

A) UNBRA (US Share)
Category Amount
(US$ million)
Food 95.9
Clothing 81.6
Medical supplies 22.8
Agricultural rehabilitation 52.2
Industrial rehabilitation 120.0
Sub-Total 372.5
Shipping and insurance 93.1
Grand Total 465. 6
B) Contribution to Board of Trustees for Rehabilitation Affairs $4,700,000
C) UN International Children’s Emergency Fund (approximate US share) $2,100,000
D) US Foreign Relief Program
Item Amount
Cereals $35,412,900
Seeds 88,400
Pesticides 609,900
Medical supplies 5,185,300
Estimated shipping 5,084,500
$46,381,000
E) China Aid Act of 1948 $400,000,000

Of the total of $400,000,000 authorized under this Act, $275,000,000 is to be expended by the Economic Cooperation Administration. Of this $275,000,000, approximately $205,000,000 will probably be spent on grain, flour, cotton and other current consumables. The remaining $70,000,000 is earmarked for a variety of reconstruction projects and to the purchase of replacement parts for existing capital equipment. A portion of the funds for reconstruction projects may be provided [Page 162]on a long-term credit basis. The Chinese Government has indicated that the $125,000,000 outside the ECA program will be spent exclusively on ammunition and other military items. Of payments already made from this fund, $3,616,557 has been to cover contracts made by China with OFLC for purchase of military matériel listed above.

V Export-Import Bank Credits

(in millions of United States dollars, rounded to nearest decimal)

Borrower To Finance Amount
Yungli Chemical Industry Machinery, equipment & services 16.0
Central Bank of China Cotton 33.0
Republic of China Cargo vessels 4.216
Republic of China Cargo vessels 2.6
Republic of China Generating equipment, materials & engineering services 8.8
Republic of China Railroad repair materials & services 16.7
Republic of China Coal-mining equipment, materials, and supplies 1.5
Total 82.8

VI Ammunition Dumped and Transferred by the US Marines in North China April–September 1947

A) The following ammunition was abandoned by the First Marine Division during the months of April–May 1947, in the Peiping-Tientsin Area:

Type Units
Rockets, HE, AT 2.36 in. 3646
Rockets, HE, AT 4.50 in. 300
20 MM 9493
37 MM 4993
60 MM Mortar 47678
80 MM Mortar 20916
75 MM Gun 5577
105 MM How 64538
155 MM How 18726
155 MM Prop, charge 10725[Page 163]
Grenades, hand 55529
Grenades, rifle 23038
Demolition blocks 47438
TNT, lbs. 29787
Charges, M–12, prop. 2420
Bangalore torpedoes 3020
Mines, anti-personnel 1014
Mines, anti-tank 2636
Small arms, .30 cal. 2195370
    .45 cal. 94100
    .50 cal. 225515
Grenade adapters 8592
Flame throwers, portable 35
Flame thrower cylinders 302
Bombs, 500 lbs. GP 62
Demolition charges 3248
Artillery fuses 16975
Pyrotechnics 13174
Blasting caps 32913
Blasting, fuse, feet 100500
Firing Device 2575
Detonators 460
Shaped charges 288
Detonating cord, feet 366200
Firecrackers, M–11 1200
Ignition cylinder, M–l 3000
Napalm, gals. 12751
Bomb fuses, AN, M–230 48
Shells, shotgun, 12GA 9000
Lighter fuse 72581

B) The following ammunition was transferred to the Chinese Navy:

(1) Ammunition charged to Lend Lease Account, transferred from storage at Tsingtao airfield (previously removed from magazines of vessels transferred):

Type Units
3"/50 1246
40 MM 6592
20 MM 169560
50 cal. 38150
45 cal. 250
30 cal. 99000

[Page 164]

(2) Ammunition charged to Lend Lease Account transferred in ships’ magazines:

Type Units
3"/50 1781
40 MM 37767
20 MM 208835
50 cal. 80255
45 cal. 29520
30 cal. 157414
22 cal. 55560

(3) Ammunition charged to Lend Lease Account, transferred at Shanghai after special shipment from U. S. as training allowance:

Type Units
3"/50 250
40 MM 100000
20 MM 150000
30 cal. 20000

C) Unserviceable ammunition in the hands of the Fleet Marine Force, Western Pacific, was abandoned by dumping small quantities at a time in revetments near Tsangkou Airfield, Tsingtao. The Chinese National Army Garrison Commander, Tsingtao, was informed of the intention to abandon this ammunition. Dumping operations began on 19 May 1947, and were completed on 13 September 1947. During this period, the following ammunition was dumped:

Type Units
105 MM Howitzer 24665
81 MM Mortar 30903
60 MM Mortar 28042
75 MM Howitzer 9337
155 MM Prop charge 6485
155 MM Prop charge 929
Grenade, hand, fragmentation 27585
Grenade, hand, all others 13640
Grenades, rifle, all types 9650
Bangalore torpedoes 1810
Small arms, cal. .30, carbine & rifle 1488490
Mines, anti-tank 372
Mines, anti-personnel 686
Shaped charges 40# 634
Shaped charges 10 # 200
Grenade adapters, all types 4272
Shell, 37 MM, all types & shot 1035[Page 165]
Rocket, HE, AT 321
Flares, trip, all types 911
Device, firing, pressure type 980
Device, firing, pull type 1410
Device, firing, push type 340
Device, firing, release type 1040
Lighter, fuse, waterproof 102000
Lighter, fuse, friction type 55000
Pyrotechnic signals, ground 1010
Fuse, igniting, hand grenade 7725
Shells, shotgun #00B 720
Cord, detonating, (Prima) 500 ft. spools 280

  1. Transmitted to the Secretary of State and the Under Secretary of State (Lovett) by the Director of the Policy Planning Staff (Kennan) with a memorandum dated September 15 as follows:

    “Attached is a Policy Planning Staff paper on U. S. Policy toward China (PPS/39), prepared for submission to the National Security Council in response to a request from the Secretary of National Defense.

    “This paper was developed in collaboration with FE and the Department’s research specialists on China against the background of extensive consultations which we held with several authorities on China from various parts of the United States. Mr. Butterworth concurs with the underlying findings.

    “If you approve, PPS/39 will be sent to the National Security Council, to be laid before the NSC Staff as a working paper presenting the view of this Department. George F. Kennan”.

    This paper was subsequently circulated by the National Security Council as NSC 34.

  2. Chairman of the Central Committee of the Chinese Communist Party.
  3. Singed at Washington, February 6, 1922; Foreign Relations, 1922, vol. i, p. 276.
  4. This figure excludes approximately $36 million of U.S. Navy vessels lend-leased to China which constituted a portion of the Navy vessels subsequently transferred to China under P.L.512. [Footnote in the original.]
  5. In addition, CN $5.16 billion and US $5 million down payments made by China as offset against US yuan indebtedness, and latter sum included in considerations of Surplus Property Agreement, August 30, 1946. [Footnote in the original.]
  6. Cash sale, subsequently covered by Eximbank credit. [Footnote in the original.]
  7. Of this amount, $16.4 million is on Maritime Commission credit terms. [Footnote in the original.]
  8. Charles L. Stillman headed the Reconstruction Survey Mission sent to China by the Economic Cooperation Administration.
  9. Sino-American Special [military] Technical Cooperation Agreement signed at Washington, April 15, 1943 (not printed).
  10. Represents take-out credit to finance vessels purchased for cash from Maritime Commission. [Footnote in the original.].