Mr. Bevin hopes that, as a result of our joint study of the views and
comments set out in the Memorandum, it may be possible to suggest the
broad basis of a plan for dealing with the rapidly developing position
in the Far East.
[Enclosure]
The British Embassy to
the Department of State
China
Foreign Office appreciation of the present
position
The Government of the Republic of China under President Chiang
Kai-shek has virtually lost control of the whole area north of the
River Yangtze as the direct result of military failures in
Manchuria. Moreover, it seems highly unlikely that the Government
forces, whose fighting value is at best problematical, will be able
to hold their
[Page 3]
ground on the
south bank of the river in the face of determined pressure from the
Communists. The northern Communist armies now hold the initiative
and are making an all-out drive on Nanking with intent to dislodge
the Central Government from its capital. The consensus of expert
opinion is that success is merely a matter of time.
Following on the Communist occupation of the whole area north of the
Yangtze the political situation is likely to take one of two
courses:—
- (a)
- The disappearance from the scene of Chiang Kai-shek, when
the Government, headed by Vice-President Li Tsung-jen and
with the support of certain military leaders, may try for a
military truce and a subsequent political arrangement by
negotiation with the Communists. As the latter hold the whip
hand it is likely to rest with them whether such proposals
are accepted or not.
- (b)
- The withdrawal of Chiang Kai-shek and a small number of
his henchmen to Canton or elsewhere in China proper in a
die-hard attempt to continue the war. Although this is
compatible with Chiang Kai-shek’s present mood and would
suit those members of the Kuomintang10 whose
fate is linked with his, it is doubtful whether the
essential quota of Government servants would be able or
willing to follow. In any event he and his associates are
now so completely discredited in the eyes of the people that
their continued existence as a shadow Government would be
entirely dependent on American support, which would have to
be much more extensive than anything so far undertaken. A
withdrawal by Chiang Kai-shek to Formosa would hardly affect
the course of events on the mainland.
Of the above alternatives the first is likely to be the more welcome
to the Communists, since it would give them control over Nanking and
Shanghai without driving away the administration and financial
elements, which they would find it difficult to replace from their
own resources. Further, if they attach importance to the
international position they would thus step overnight into the
controlling position in a recognised government. To the extent that
they are guided by Moscow they may be encouraged to pursue this
policy with a view to strengthening the opposition to the Western
Democracies in the United Nations.
Much has been written which suggests that the Chinese Communists are
Communists only in name. Justification for this view lies in the
fact that up to the present there has been no need for Moscow to
take any overt hand in the civil war or for the Chinese Communists
to make any appeal to their compatriots save that of relative
honesty, relative efficiency, an ostensibly fair deal in the, matter
of land reform and above all peace. On the other hand, a careful
study of their official pronouncements shows that their leader,
General Mao Tse-tung,11
pays
[Page 4]
at any rate whole-hearted
lip service to the Marxist-Leninist philosophy, while the Moscow
press has avoided comment on his successes with such scruple over so
long a period as to suggest that it is in the interests of Soviet
policy not to trouble the pipe dreams of the complacent. Inasmuch as
the Communist administration appears to be better disciplined and
less corrupt than that of the Central Government, it may well be
that if it is their policy to develop and exploit Chinese resources
their initial attitude to foreign technical ability and trading
interests may be encouraging. It would, however, be highly dangerous
to assume that this initial honeymoon period would be likely to
ripen into any enduring bond.
It is nevertheless clear that, by whichever means the Communists
acquire control of the area south of the Yangtze, they must inherit
the economic ills of the land. If they do so by entering a coalition
Government the drain on the exchequer from civil war would cease,
but it may be assumed that the Central Government has already
reached such a degree of insolvency that the advantage of this is
likely to be more apparent than real. In our present ignorance of
Communist internal policies it is impossible to measure the degree
of handicap which this state of affairs will represent, but its
existence can hardly fail to induce the Kuomintang’s successors to
seek to maintain the country’s export trade in order to pay for her
essential imports, and in this connexion some initial benefit to
British traders may accrue. Moreover, it is also fair to assume that
General Mao Tse-tung will be hard put to it to provide the necessary
administration, the more so as the number of his efficient followers
is probably limited and will become somewhat thin on the ground when
the whole of China falls to be administered. This factor, too, may
well tend to shelter British interests for some time from the full
force and fury of Communist theory and practice. But of the ultimate
intentions of Mao Tse-tung, if he succeeds in surmounting local
difficulties, there is little doubt.
In either event the Communists would almost certainly require a
fairly lengthy period of preparation and infiltration before moving
very far south of the Yangtze. Even in the absence of any coherent
opposition, therefore, the eventual Communist domination of the
whole of China is likely to take some little time. Whether advantage
can be taken of the breathing space to create an anti-Communist bloc
(for which American aid would be essential) remains to be seen, but
as already indicated, the prospects are very doubtful.
Conclusions
(i) In China it can be assumed
- (a)
- that there will be an immediate period of dislocation when
foreign commerce generally will be at a low ebb;
- (b)
- that there will follow a period in which the economic
difficulties of the Communists may dispose them to be tolerant
towards foreign trading interests;
- (c)
- that the present nationalist tendency towards foreign
investments and capital installations will thereafter be
enhanced and that the intention to work rapidly towards the
exclusion of the foreigner will be strengthened;
- (d)
- that there would be a tendency to subject foreign trade, both
import and export, to close government control, which would not
altogether suit the types of trade United Kingdom merchants aim
at doing in and with China.
British interests in China may be able to carry on at least for a
time and His Majesty’s Government will encourage this.
(ii) Political effects on adjacent Areas.
Communist activities in adjacent areas will be increased and the
contacts between Communists in these countries will be facilitated.
The economic effects in these areas are likely to be an increase in
labour troubles and disturbances in the production of vital
commodities.
Recommendations
- (a)
- That His Majesty’s Government should consult with the
Governments of the United States, the British Commonwealth,
France, Netherlands, Burma and Siam as to the best means of
containing the Communist threat to our several interests.
- (b)
- That all necessary steps should be taken to strengthen our
position in colonial territories in the area.
- (c)
- That we should consider, in consultation with friendly Powers
whether the economic weakness of Communist-dominated China might
not offer an opportunity to secure reasonable treatment for our
interests.
Washington
, 5
January, 1949.
