893.00/7–2748
Memorandum by the Director of the Office of Far Eastern Affairs (Butterworth) to the Secretary of State 15
Reports from the Embassy at Nanking and from other U. S. official sources indicate an increasing dissatisfaction with the Generalissimo and the present leadership of the National Government on the part of many Chinese provincial leaders and military commanders as well as the Chinese public. These reports indicate that there is a growing feeling among the Chinese people in non-Communist areas that the present Government must go and that many Chinese are reaching the stage where they would be willing to accept a government based on coalition with the Communists or even a Communist government if this would bring peace.
In the military and economic fields the picture is not encouraging. Recent appointments of military commanders by the Generalissimo have been made almost solely on the basis of personal loyalty to him regardless of the known record of venality and incompetence of some of these appointees. General Fu Tso-yi, ranking Government general in the Peiping–Tientsin area, the most successful of all National Government commanders against the Communists, is said to be receiving little or no military matériel from Nanking. Inflation is bringing the currency closer to the point of complete collapse and there have been dangerous increases in the velocity of currency circulation.
Politically, as has been stated by Ambassador Stuart, the present Government lacks capability to halt the spread of communism and will continue to lack this capability unless, as seems unlikely, it can find the inspired leadership needed to rally the people and restore to National armies the will to fight. The Ambassador comments that the Generalissimo cannot be expected to provide that leadership as he seems incapable of change and gives every evidence of an intention to persist in the personal rule which has resulted in the present sad state of affairs.
General Li Tsung-jen, of whom some action toward reform was expected after his election as Vice President, has apparently been ignored by the Generalissimo. He now seems to be waiting for some turn of events which will give him an opportunity to make his influence felt or to take effective action to rally support to his ideas and objectives. Various unconfirmed reports indicate that Marshal Li Chi-shen, Vice President Li Tsung-jen, General Fu Tso-yi and various other provincial leaders in north and west China are cooperating in preparations against the eventuality of a collapse of the Generalissimo’s [Page 380] Government. Furthermore, Marshal Li Chi-shen has stated privately that he expects to establish in the near future a coalition government with Communist participation at some unnamed point in China.
These developments are natural in the current situation where the trend is toward regionalism and fragmentation. The breakdown of the National Government’s authority spreads as the currency which binds officials and armies to its support moves towards valuelessness and as its ability to furnish food and equipment for the armies is weakened. The breaking point has not yet arrived but it is obviously a possibility which must be contemplated and for which plans must be made.
Given a continuation of the present deterioration, there are several possible developments which might occur: (1) The Generalissimo might be removed from the scene through a coup d’état and the question of his successor quickly settled by the legal succession of Vice President Li Tsung-jen. In this eventuality the problem of recognition of a new regime would not arise. (2) Marshal Li Chi-shen may, as he has indicated, establish a provisional government in the near future as a coalition regime with Communist participation. Such action might bring into the open other opposition movements and might thus precipitate, or at least hasten, the collapse of the present Government. (3) In the face of further military deterioration the Generalissimo might be compelled to withdraw from the Nanking-Shanghai area and remove his capital to Canton or to Formosa. (4) If the Generalissimo should withdraw to Canton or Formosa, it is possible that various provincial groups would establish a rival government (or governments), which in turn might seek an accommodation with the Chinese Communists. Such groups might actually control a larger part of China than that under the Generalissimo’s control at this stage. They might approach the United States with an appeal for aid, and perhaps recognition, prior to making overtures to the Communists. Failure of the United States to give aid or encouragement of any kind would probably lead to the group’s coming to terms with the Communists in a coalition controlling the larger part of China. The alternative to such a coalition might be deals between the Communists and individual provincial leaders, which would eventually lead to Communist absorption of the various provincial elements piecemeal.
Any regime in opposition or succession to the presently constituted Government would be faced with the necessity of recognizing the war weariness of the Chinese people and their desire for peace at almost any price. It should be noted that in several of these hypothetical situations, the United States would be confronted with the complex [Page 381] problems of relationship with the various regimes established, the application of the aid programs for China, the status of the U. S. military advisory groups, the status of its consular offices in China and the questions of American trade with the various areas.
We have already had some indication of the possible future reaction and attitudes of these provincial elements. In a secret memorandum prepared by Vice President Li Tsung-jen in 1947, a copy of which was received by the Department,16 he pointed to the possible development of a situation in China where the presently constituted National Government would collapse and there would arise a grouping of various provincial leaders which would need and desire American aid against the Communists. General Fu Tso-yi has already made efforts to purchase munitions from private American sources. General Wang Yao-wu, Governor of Shantung Province, has made overtures to the U. S. Navy authorities at Tsingtao for military matériel.
The present policy of the United States Government restricts the transfer or export from the United States of military materiel to China to the National Government. Admiral Badger in a recent telegram17 suggested the desirability of making munitions available to General Fu Tso-yi, either through direct transfers or through pressure on the Chinese Government to turn over to General Fu materiel acquired by it under the $125 million grants. The American Consulate General at Tientsin has made a similar recommendation, based upon the importance of north China and the success General Fu has had against the Communists in contrast to the repeated failures of other National Government commanders.
It is understood that the Policy Planning Staff will in the near future complete its long-term China policy paper.18 It is recommended, therefore, that upon the completion of this paper the question of United States policy toward China, including the possible developments suggested above, be referred to the National Security Council.
- Marginal notation: “Seen by Secy”↩
- Not printed; the memorandum dated May 25, 1947, was handed to the Consul General at Peiping at the time of his departure from that city, with the request that it be transmitted to the Secretary of State.↩
- No. 8979, July 16, from the Commander of U. S. Naval Forces in the Western Pacific (Badger) to the Chief of Naval Operations (Denfeld), vol. viii , U.S. Military Assistance to China” (Ch. II).↩
- Memorandum by the Policy Planning Staff, dated September 7, ibid. ↩