Foreign Relations of the United States, 1949, The Far East: China, Volume VIII

893.00B/7–1649: Telegram

The Consul General at Shanghai (Cabot) to the Secretary of State

Shanghai, July 16, 1949—8 a. m.
[Received July 16—2:28 a. m.]

2796. As I prepare leave China, I present for what they may be worth following thoughts re basic policy problem confronting US in China:

1. Essential question is whether Chinese Communists can operate independently of Kremlin. In Eastern Europe, except Yugoslavia, Communists cannot so operate, any leader who tries such course is promptly eliminated by orders from Kremlin. I am inclined think Kremlin does not have that power now in China. Despite friendly and close links with Soviets and despite ever more vociferous statements indicating Chinese Communists will slavishly follow Kremlin lead in international affairs, there is considerable evidence that even now Chinese Communists do not always see eye to eye with Kremlin and conceal this, if at all, only because they have easier and more important matters to attend to.

2. If Chinese Communists can make independent decisions, their eventual cooling off towards Soviets seem[s] probable. Even Chinese Communists cannot indefinitely gloss over gross evidence of Soviet imperialism on Chinese soil, their laughable attempts [to] explain them away show how much they irk even now, and as pressures from “Western imperialism” diminish, explanations will become even more absurd.

3. Chinese Communists are by no means monolithic bloc favored by Soviet theorists. We have ample evidence of fissures flowing from personalities, issues, regional differences, et cetera.

4. Our problem then is to prevent Soviets from getting firm control of Chinese government before natural forces cause it to split from Soviets. Problem is formidable, because apart from core of Kremlin stooges among Chinese Communists who know what they want when others don’t, there are undoubtedly many (as in Eastern Europe) who will unwittingly play Moscow’s game till it is too late. Nevertheless, inherent factors are even more favorable to West here than they were in Yugoslavia because:

(a) Chinese Communists [are] even less beholden than Tito [to] Soviets for attainment present position.

(b) Chinese Communists less dependent on Soviets than Tito.

(c) Yugoslavs Slavic whereas China has own civilization with almost inescapable Western links.

(d) Russia historically and today imperialist threat to China, whereas traditionally friend and protector of Serbs.

(e) Despite Chinese Communist pronouncement, Chinese Commumism today in practice resembles Soviet Communism scarcely more than Taiping dogma resembled Christianity. (However, these differences with Soviet Communism may well be deceiving.)

5. It is clear that a Communist-dominated regime is to control China and that there is no force now discernible which might challenge this control. If any regime more responsive to our viewpoint is to arise in future, it will probably stem from ranks now Communist rather than Nationalist.

6. Most serious threat Communists must now face is economic rather than military or political. Cumulative effects of over-population maladjustments, prolonged warring, Kmt corruption and incompetence, continuing inflationary factors and nationwide crop deficiency are being aggravated by blockade, continuance of civil war, and fact that Communists unlike Nationalists have no fat on which to draw. These factors coupled with Communist inexperience with urban economics, doctrinaire approach, long isolation and suspicion and hesitancy in accepting outside expert advice are swiftly forcing China’s economy, with vortex at Shanghai, towards disaster. This may well force new authorities to take drastic action involving fundamental decisions of vital imports of [importance to?] foreigners.

7. In its foreign aspects, such new action line can hardly fail to be in one of two general directions (opposing urges towards each of which have already been discernible in Communist utterances and behaviour):

(a) That of gaining Western economic technical cooperation in solving crisis—which of course would necessitate exploratory friendly advances (presumably very cautious at start), readiness for compromise and moderation of intensely suspicious belligerent attitude towards foreigners.

(b) That of rejecting concept of cooperation with West as impossible and proceeding to uproot all Western activities and interests in China. Economic disadvantages this course might be partly counterbalanced by:

(1) Plundering of Western capital through labor excesses, wages and other impositions, hostage tactics and downright confiscation.

(2) Exploiting to full possibilities of turning popular resentment over economic distress against foreigners rather than authorities as scapegoats.

8. I have little doubt Chinese Communists would emotionally prefer follow second course. Nevertheless, it is clear their basic policy is to make substantial concessions to first course. Motives for this are probably varied and mixed; any Communists despite past Western arrogance and imperialism, and American aid to Nationalists, would doubtless genuinely welcome better relations with West; others consider them necessary on a hard-headed economic basis; and yet others probably want milk West of everything possible before deliberately squeezing Western activities in China dry. Difficulty is, however, that basic policy considerations are being overridden by inexorable contradictions in Communist doctrine (for example in attitude towards foreigners) and by insoluble problems (Shanghai economics). Considerable unrest and discontent is already evident in Communist-held areas which Communists obviously reluctant curb with too heavy hand. With economic situation deteriorating, their difficulties likely grow.

9. Under these circumstances, course ultimately followed by Chinese Communists may well depend in large measure on course adopted by West. In this connection, it is well to remember that Yugoslavia was definitely committed to Soviet economic bloc; China as yet does not seem to be. If Communist moderation and tentative pro-Western moves are met by rebuffs, further pressures, trade limitations, and vitriolic publicity (corresponding to Communist propaganda which has done such harm to their relations with West), then Communists are likely to reason that modus vivendi with West is impossible, and advocates of that course have likely to keep silent or be driven from power. Given Communist ideology and emotions, advocates of moderate policy must be in position to show positive results if they are to get anywhere. On other hand, too yielding a policy on part of West may convince Communists they can get what they want without making any real concessions; that Westerners will accept anything to make profits.

10. If West pursues a course of positive hostility to Chinese Communists, this may so undermine shaky economy of Communist-held areas that regime will eventually collapse. But if any such course is pursued we must realize not only that it implies end of Western activities in Communist-held areas and confiscation of Western property, but also that it will endanger life and freedom of every Westerner in these areas. We must also remember that real solidarity among Western nations under those circumstances is improbable.

11. In light of above considerations, I feel we should get all Americans we can out of Communist China as soon as possible. This should bring issue to head before situation has reached climax, should give Communist leaders pause and in long run will, I hope, diminish dangerous issues rather than increase them. Principal complication I see from policy standpoint is that British and French because less exposed and more heavily involved are willing to accept humiliations and dangers to greater extent than we.

12. There are of course other issues regarding which Communists will yammer even if we withdraw from China: Korea, Japan, Formosa, Hong Kong, French Indochina, et cetera. Nevertheless, the less pledges to fortune we have in China proper, the tougher we can be on those issues. Moreover, they should not have quite same appeal to populace, and we should therefore be in better position to mount a counteroffensive re Russian imperialism in China.

13. The fewer Americans and American interests on which Communists can exert pressure, the better position we shall be in to sit back and wait for Chinese Communists to come to us. Nothing I should imagine would suit our purposes better than to have Soviets sucked into Chinese [situation?] economically; catastrophic economic situation here would prove costly drain on Soviet economy, and Chinese Nationalism should make it thankless task.

14. To get out of China now may therefore paradoxically prove best means of accomplishing our fundamental purpose of causing a split between Soviets and Chinese Communists. It would be somewhat expensive and it might well result in permanent diminution of our influence in China. On other hand, it would give us better chance to sit with dignity on sidelines, not necessarily needling Communists, but denying them many things they want badly.

15. If Communist[s] want decent relations with West, proposal to withdraw Americans from China will show them they can have such relations only at reasonable price. If they do not, Americans should not be here.

16. In larger sense as I see it our ability to sit it out and make it clear to Communists they are losing far more than we through bad relations will be greatly strengthened if important business and missionary interests are not pressing for appeasement. By avoiding provocation yet making it clear Chinese Communists can’t have what they want without meeting reasonable terms, Chinese should eventually come to realize Communists are authors of their misfortunes and even Communists may realize this too. In meantime I should imagine that Chinese Nationalist sentiment plus economic misery both deftly stimulated by propaganda might well produce change in Communist policies, splits among Communist leaders, or even successful revolt against Communists. Any of these developments would presumably promote a China independent of Soviets in international affairs, which I conceive to be supreme aim of American policy in China.

Sent Department, repeated Nanking 1575, OffEmb Canton 888.

Cabot