Ext 6116/46(S) 'Secret Weekly Political Intelligence Summaries, nos 356-416, August 1946-November 1947' [‎25v] (50/978)

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the verge of bankruptcy. But China is
growing accustomed to being on the verge
of national bankruptcy and refuses to be
unduly alarmed at the prospect. Instead,
she derives some comfort from pointing to
the fact that the economic crisis is not con
fined to China, but world-wide in scope,
and she continues to centre her hopes on
the timely arrival of help from the United
States. These hopes have been greatly
stimulated of late by the opinions expressed
in Nanking by a party of U.S. members of
Congress who are visiting China, the leader
of whom is credited with having sent a
telegram to President Truman urging the
United States to aid the Chinese Govern
ment by “ prompt, bold and rapid action.”
That China's faith in help ultimately
coming from the United States is not
entirely unjustified is indicated in the
assertion of General Yu Ta-wei that the
Chinese Government have been granted
permission to draw from United States
stocks in Manila aircraft-machine-gun
ammunition to the value of ten million U.S.
dollars on condition that it is offset
immediately by the purchase of a similar
quantity of ammunition in the United
States. General Yu said that the Chinese
Government were highly gratified at this
offer, but in the same breath expressed his
own doubts of the Chinese Government’s
ability to find the ten million dollars.
The State Department have announced
that the report submitted by General
Wedemeyer on his return from his “ fact-
finding mission ” is not to be made public
for the present. Nevertheless, the trend,
if not the full scope, of the General’s
recommendations and conclusions has been
well aired in the American press, and it is
confidently believed that both President
Truman and Mr. Marshall have accepted
them. It is presumed that these recom
mendations include positive action by the
United States, but so far there has been no
response from Washington to China’s
recent request for substantial credits.
Meanwhile, the generous scale of help to
China advocated by Mr. William Bullitt,
former United States Ambassador to
Moscow and Paris, who has been visiting
China in an unofficial capacity as a repre
sentative of Time and Life, has been wel
comed enthusiastically by the Chinese
press. Mr. Bullitt is reported as having
said that, should China be drawn into the
Soviet orbit, the whole of Asia, including
Japan, would become subject to Soviet con
trol, and to have demanded that General
Chiang Kai-shek be provided by the
United States Government with a sum of
U.S. $1,350,000,000 to enable him to over
come the Chinese Communists and reduce
Soviet pressure.
Lo Lung-chi and other leaders of the
Democratic League are being closely
shadowed by the Nanking police and, on
the 22nd October, regulations were issued
calling upon all Communists and “ persc^
connected with them ” to register within
ten days. These regulations are clearly
directed against the Democratic League,
which has long been suspected in official
circles of being hand in glove with the
Chinese Communists. According to a
recent statement by a spokesman of the
Ministry of the Interior, the League has
now been declared an “ illegal political
party.” The recently-opened branch of
the Democratic League in Singapore is
reported to have announced that in this
time of bitter struggle between “ demo
cratic factions ” and “ anti-democratic
factions ” the League definitely takes its
stand among the former and, in the face of
the ‘ c illegal ' ’ general election which the
“ Kuomintang Government ” are about to
carry out, the Democratic League can no
longer be looked upon as the “ Third
Party" or a “neutral faction” and is
forced to discontinue its efforts to bring
about a Kuomintang-Communist peace-
settlement.
In the civil war the Central Government
are thought to have strengthened their
hold on eastern Shantung, and General
Chiang Kai-shek has recently paid a flying
visit to the newly captured ports of Chefoo
and Weihaiwei. In the western section of
the province, however, a new Communist
force has appeared in the neighbourhood
of Tsinan and is said to be again threaten
ing the Tsinan-Tsingtao Railway. In the
Yangtsze region General Liu Po-ch’eng’s
forces are becoming increasingly active on
the north bank of the river between
Anking and Kiukiang. Further west also
they recently succeeded in capturing
Wusueh, but the Central Government
claim that their forces recaptured the town
almost immediately. There are reports
that another Communist column under the
command of General Chen Yi is moving
towards the south-west to effect a junction
with General Liu Po-ch’eng. Government
reports state that, following his defeat in
eastern Shantung, General Chen Yi
“ gathered the remnants,” but the force
under his command is believed to be of
some size. In Manchuria no large-scale
fighting has taken place. Communist
pressure on their original objectives has
somewhat relaxed and the bulk of their