893.002/3–2549: Telegram
The Minister-Counselor of Embassy in China (Clark) to the Secretary of State
[Received March 26—3:03 a. m.]
Cantel 169. New Cabinet seems to represent effort Li Tsung-jen and Ho Ying-chin to combine all aspects anti-Communist elements in supreme court [final?] effort obtain acceptable peace. Its principal feature appears to be absence C–C clique and others heretofore closely identified with and controlled by Generalissimo. This appears indication Cabinet will probably cooperate with Acting President and implement his policies to extent possible. However, its capability is limited by fact that Generalissimo and his associates still have great influence. Li in fact is on trial. Despite military influences Ho Ying-chin, Generalissimo can be expected continue control and does in fact control large segment army, navy and air force. Also, control secret police will almost certainly continue in Generalissimo. Finally, it is unlikely new government will gain control principal national reserves precious metals and foreign currency. These factors, taken in conjunction with pervasive and persistent developments [Page 200] toward regionalism, must inevitably restrict scope operation new Cabinet and greatly hamper its effectiveness. Unless these difficulties are overcome, for which there appears little hope, Nanking will have very weak bargaining position in peace talks with Communists, who may, and probably will, raise issue that Li Tsung-jen’s government has little or no ability to commit non-Communist[s]. On peace issue, we believe new Cabinet will follow line taken by Acting President. In fact, there is evidence Li fails keep Cabinet informed all phases his activities toward peace. He has told us, and we are inclined to believe, that he will only agree to terms offering some guarantee his political survival, presumably either through inclusion himself heading bloc his followers in coalition, or formation coalition along regional lines with semi-independent south and southwest. We believe that Li will try secure such settlement by any means possible, including, if necessary, Soviet mediation. Wu Tieh-cheng’s refusal join Cabinet appears based on his failure get from Li or Ho Ying-chin clear-cut statement on foreign policy or peace terms. From this and other considerations, we are inclined to believe that Li may be willing seek rapprochement with Soviets if feasible and necessary maintain himself in authority. Whether he would succeed in so doing is doubtful, but it is not unlikely that he may make attempt. Appointment Fu Ping-chang, who though reputedly not pro-Soviet has wide acquaintance Soviet officials, was probably made with view facilitating some such course action.
In final analysis, Generalissimo continues hold balance power in non-Communist China and is most unlikely commit his influence unconditionally in support Li. We are inclined believe Wu Tieh-cheng’s statement that Generalissimo solely motivated by interest Chinese people (my Cantel 142, March IT, repeated Nanking 122, Shanghai 87), yet it is Generalissimo himself who will determine what Generalissimo deems in interest Chinese people. Formation new Cabinet reduced and almost entirely eliminated Generalissimo’s formal influence in structure Government and to this extent improved position of Acting President. However, Generalissimo retains de facto and to some extent de jure power intervene in national affairs when and as he sees fit.
Initiative remains with Communists and they give no indication of willingness to accept anything other than practically surrender to which Li and his associates insist they will not agree.
Principal interest, therefore, is in Communist intentions and timetable. Their North Shensi broadcast of March 23 (my 165, March 24, repeated Nanking 148, Shanghai 106) is one of many indications that Communists intend conquer all China before ceasing military operations. [Page 201] It remains therefore only to determine when present temporary lull will end and hostilities on major scale will be resumed. In this situation, current change in Cabinet can have but little real political significance.
Sent Department, repeated Nanking 152, Shanghai 111. Pouched Peiping, Hankow, Kunming, Chungking.