Foreign Relations of the United States, 1951, Korea and China, Volume VII, Part 2

793.00/8–151

Memorandum by the Deputy Director of the Office of Chinese Affairs (Perkins) to the Deputy Assistant Secretary of State for Far Eastern Affairs (Merchant)

secret

[Washington,] August 1, 1951.

Subject: Trends in Communist China.

Conclusions and Summary

Available information points to:

a. limited Communist attacks on Nationalist held offshore islands;

b. rapidly increasing diplomatic pressure upon and covert activity within India, Burma, Thailand, Malaya, Indonesia;

c. liaison and coordination with covert groups in Hong Kong, Philippines, Japan, Taiwan;

d. a setup in the flow of arms and limited number of trained men to Burma;

e. no large scale commitment of intact Chinese Armies in support of the Vietminh (as occurred in Korea, December 1950) but a rapid flow of men and material to be mixed with Vietminh armies as “volunteers”.

Recent Developments

There has been considerable speculation that any cooperation of the Chinese Communists in cease-fire talks in Korea would result in increased Chinese pressure elsewhere in Asia. It is believed appropriate, therefore, to review the mass of intelligence reports available and to endeavor to ascertain whether such pressure is likely to occur. The following recent developments can be evaluated as “true” or “probably true”.

1. Chinese minority groups in southeast Asian countries are remarkably non-political in current activities. This contrasts sharply with the open pro-Communist psychological reaction which followed the Chinese Communist initial success in Korea last December.

2. There is a marked build-up of Chinese Communist troops in South China.

3. Top priority is being given inside China to the construction of strategically important highways and railroads. Current projects reported include the completion of a railroad from Nanning to the Indo-chinese border, commencement of work on a new railroad to connect Chungking and the Trans-Siberian railroad, and major highway repairs on a road leading westward toward Tibet from Chengtu.

4. The anti-guerrilla campaign has been largely successful, with the exception of guerrilla units which fled to relatively inaccessible mountain areas in Yunnan, Kwangsi and Kwangtung. Guerrilla activity is now limited to hit-and-run tactics.

5. The relative commercial importance of Hong Kong to Communist China as of this writing, has appreciably decreased. (It will be recalled that many British residents of Hong Kong have argued that Hong Kong will remain unmolested so long as it is useful to the Communists, although under British control.)

6. There has been a major Communist China diplomatic build-up in India, Indonesia and Burma. In addition to organizing Communist support among resident Chinese minorities, Chinese diplomatic personnel have been useful in obtaining scarce goods.

7. Centralized administrative control has been established inside China for coordinated aid programs for Communist groups in Burma, Thailand and Indochina. This has been paralleled by the establishment of training schools for underground leaders and by the formation of a joint Chinese-Vietminh Military Field Staff.

8. Following the completion of the alleged agreement with Tibet, May 23, there has been a sharp speed-up in the westward movement of Chinese troops toward Tibet and India.

9. The Chinese economy rapidly is being geared for a larger military effort.

10. There has developed a recent Chinese Communist interest in the proposed Japanese Peace Treaty, an interest which ties in with intelligence reports outlining a USSR-Chinese plan to launch future attacks upon Japan itself.

11. There is a build-up of USSR military forces on the Liaotung Peninsula and in eastern Siberia.

12. There has been activated through Hong Kong a wide-spread Communist counter-intelligence program with emphasis upon infiltration of special agents into Japan and Taiwan.

13. Despite numerous claims of Third Force leaders, there is no indication that any individual leader has sufficient ability or commands a sufficient number of Chinese to organize an effective Third Force Movement. The Gimo apparently is having increasing success in neutralizing or intimidating potential Third Force leaders. Unfortunately the Gimo’s action supplements infiltration tactics of Communist China.

14. It seems well established that the Huks in the Philippines are now maintaining regular contact with the Chinese Communists.

Prognosis

A. Factors making for increased strength of the Communist Chinese Government.

1. Development of a major military effort will result in increased control by the Central Government and in a general improvement of governmental administrative machinery. In economics, this development will be characterized by the imposition of economic controls, the decline of private enterprise, an increase in State trading, and by lower standards of living for the mass of non-party members. Politically, it will be characterized by continued liquidation or neutralization of opposition groups.

2. The ruling Communist clique will acquire an increased psychological hold over the people through the social, economic, and political isolation of Chinese individuals from all contact with the Western World. This development will be accelerated by the departure from China of western business men, missionaries and diplomatic representatives, and by the tightening hold of USSR advisers.

3. Concomitant with increasing internal strength, there is likely to be increasing external Chinese Communist activity. Such activity will include the shifting of military forces toward, and the exerting of political pressure on India and southeast Asian countries and an accelerated infiltration of agents into Hong Kong, Macao, Japan, Taiwan, Philippines, and possibly into Hawaii and among Chinese residing in the United States. As an expression of militant imperialism, the Communists will renew their drive for a seat in the UN.

4. Any cessation of actual fighting in Korea will probably result in a divergence of opinions among presently cooperating non-Communist countries and may well include British appeasement of Chinese Communist economic and political activity in Hong Kong, and increased UK reluctance to continue economic controls on trade with Communist China.

B. Factors making for weakness.

1. The initial enthusiasm of many Chinese for the Communist Government is almost dead and henceforth there will be a gradual increase in individual resentment of Governmental controls; this resentment may develop into activity bordering on covert opposition.

2. Isolation of Chinese from the Western World and the commitment of men and resources to support military mobilization will result in a sharply increased dependence on the USSR. It is of interest to note that although USSR support will be a major factor in contributing to Chinese imperialism in the Middle East and southeast Asia, the USSR is simultaneously creating a USSR “sphere” as a buffer area between Chinese and Russian territory. (This area includes Sinkiang, Outer Mongolia and Manchuria.) This development may indicate a strong USSR distrust of possible future Chinese “Titoist” activities.

3. With the consolidation of internal administrative control and with the development of increased dependence on the USSR, there will probably be a weakening of the united front which previously existed among key Chinese leaders. Thus, there have been increasing reports of friction between Liu Shao-chi, Chou En-lai, and Mao. It is of interest that numerous recent articles coming from Communist China concerning the history of the Chinese Communist party have praised only Mao, and have found fault, in at least minor respects, with some of the other leaders. It is yet too early to know whether a large group inside China is opposed to Chinese dependence upon and subservience to USSR; however, it is reasonable to expect that success in imperialistic programs in the Middle East and southeast Asia will tend to enhance the confidence of those Communists who are “ambitious nationalists” as well as Communists.

4. It is inevitable that the rapid increase in the Chinese armed services will decrease proportionately within the armed services command control by old-line Communist party men who were experienced in the long fight against Chiang Kai-shek. There have been recent reports of defections of small militia units and isolated army units to guerrilla bands. Furthermore, there is some evidence of the development of a Whampoa clique of Army officers who oppose the dependence on Moscow.

5. Communist China losses of men and material in Korea have been serious and cannot quickly be replaced. Despite reliable evidence of army unit reorganization, or accelerated technical training courses and of increasing supplies of material along China’s east coast, it is unlikely that in the near future the Communists will launch an attack on Taiwan or Hong Kong; A major assault on Taiwan would constitute premature commitment of men and limited supplies in a venture in which the Communists can expect at least US and possibly UK or UN forces to be involved. In addition to its commercial usefulness, Hong Kong is valuable as a blackmail weapon to be used in encouraging friction between the UK and US.