793.94/8509: Telegram
The First Secretary of Embassy in China (Merrill) to the Secretary of State
[Received February 8—2:10 p.m.]
54. 1. Sung Che Yuan and the commander of the Japanese North China garrison are conversing periodically at Tientsin. Chinese and Japanese officials state that the conversations are probably confined to economic cooperation. It is understood that the Japanese are primarily interested at present in the questions of (a) developing the Lungyen iron mines in Chahar and the Chingying coal mines in Western Hopei and (b) constructing the Shihkiachwang Railway.
2. Apparently no progress is being made toward an increase of autonomy in North China. Sung Che Yuan is said by Japanese to have become more conciliatory toward them during the detention of Chiang Kai-shek at Sian but to have reverted to his previous attitude after Chiang’s release.
3. Fresh and significant developments in North China presumably await (a) clarification of the situation created in China by the trouble in Sian and (b) clarification of the political situation at Tokyo.
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