893.00/12945
The Chargé in China (Gauss) to the Secretary of State
[Received February 6.]
Sir: Referring to the Legation’s telegram No. 11 of January 5, 1934, 1 p.m.54 and despatch No. 2828 of July 11, 1934,55 reviewing, respectively, important developments in China during 1933, and during the first six months of 1934, I have the honor to submit a similar review of developments in China which occurred during the year 1934.
The outstanding problems confronting the National Government during the year 1934 were (1) relations with Japan; (2) relations with the Southwest; (3) the communist situation; and (4) the economic and financial situation.
The principal events of 1934 were (1) suppression of rebellion in Fukien Province (January); (2) the appointment of Marshal Chang Hsueh-liang to a post in Central China under General Chiang Kaishek (February); (3) initiation by General Chiang Kai-shek of the “New Life Movement” (March); (4) inauguration of an “autonomous” government in Inner Mongolia in China (April); (5) reestablishment of through passenger traffic on the Peiping–Liaoning [Page 345] Railway (July); (6) floods and droughts during the summer; (7) establishment of Chinese customs houses along the Great Wall (August and September); (8) failure of the League of Nations to vote China eligible for re-election to a non-permanent seat on its Council (September); (9) development during the second half of the year of a financial crisis; (10) trip of General Chiang Kai-shek to the Northwest and the North (October and November); (11) expulsion of communist forces from Kiangsi Province (October and November); (12) postponement of the Fifth Plenary Session of the Kuomintang (October); and (13) announcement of agreement with Japanese authorities to inaugurate early in 1935 normal postal communication between China and “Manchukuo” (December).
A. The Government:
The diminishing power of the National Government continued to be transferred to the increasingly powerful General Chiang Kai-shek who, dominating the Government, acted with vigor in certain directions while the officials of the Government drifted, more interested in personal and factional jealousies than in the extrication of China from its urgent and profound problems. The actions of General Chiang gave to China an appearance of increasing unity. This appearance lacked reality because of various fundamental factors of a disintegrating character with which General Chiang and the Government failed to deal effectively. There seemed to be small cause for genuine optimism with regard to the future of China under the present régime and grave cause for pessimism.
B. Chinese unity: integrating factors:
By General Chiang’s unexpectedly rapid suppression early in the year of the rebellion in Fukien Province and by his occupation during the autumn of the Chinese soviet area in Kiangsi Province, militarists occupying areas outside the sphere of General Chiang’s actual control were rendered cautious in their dealings with him. This new attitude was illustrated by (a) visits during the spring of northern militarists to General Chiang; (b) by the reception extended to General Chiang during his unexpected visit in the autumn to northwestern and northern provinces without a bodyguard; (c) by, less significantly, the more temporizing attitude of Kwangtung militarists; and (d) by the visit in November to General Chiang of the leading Szechuan warlord to ask for help against communist forces in his province. There was, however, little assurance that these generals, given an opportunity, would not forsake this new attitude to serve their selfish interests. Nor was their new attitude implemented by any significant reduction or unification of their armed forces, a requisite for real unity.
[Page 346]There was, as previously, some progress made in communications, education, health service, civil service, political administration, and urban rehabilitation and construction. These, and other forward developments, however, appeared to be more than counter-balanced by certain factors working against unity.
C. Chinese unity: disintegrating factors:
- (1)
- Japanese expansion: An appearance of improvement in Sino-Japanese relations was created (a) by the removal southward from North China of 118,000 of the 265,000 troops loyal or nominally loyal to Marshal Chang Hsueh-liang, following his appointment in February to a post in Central China under the Generalissimo, (b) by the reestablishment in July of through-traffic on the Peiping-Liaoning Railway, (c) by the establishment in August and September of Chinese Customs houses along the Great Wall, and (d) by agreement for the inauguration early in 1935 of normal postal communication between China and “Manchukuo”. Actually, however, there was no reason to believe that the Japanese military had relaxed its intention to gain economic (and presumably substantial political) control of at least North China. Nor was there reason to believe that the National Government could alter its policy of slow compliance with Japanese wishes to avoid more forceful methods being adopted by Japan.
- (2)
- Communist forces: The occupation by Nationalist forces of the communist area in Kiangsi Province was undoubtedly a step toward Chinese unity as it brought that province under the direct control of General Chiang Kai-shek. However, the escape of the main body of Kiangsi communist forces to west China in considerable strength merely altered the locale of the communist threat and, in fact, increased the potentialities of that threat by creating the possibility of union between the communist forces of Kiangsi with communist forces in Szechuan in a vast area where the problems of elimination are even more difficult than they were in Kiangsi Province.
- (3)
- The Southwest: Although the extension of General Chiang’s power over Fukien and Kiangsi Provinces to the border of Kwangtung Province had an ameliorating effect on the attitude of the military of Kwangtung Province and of the recalcitrant politicians resident in Canton and Hongkong and although negotiations occurred at various times during the year between representatives of the National Government and the leaders of the Southwest, yet no significant rapprochement was effected nor did observers anticipate any fundamental or permanent improvement in the relations of the two factions in the near future.
- (4)
- Economic and financial conditions: Notwithstanding the growing realization of at least some of China’s leaders that the unity of [Page 347] China cannot be accomplished without a solution of China’s basic economic and financial problems, yet efforts of the Government in this regard continued to be ineffective. Old and new programs for solution continued to be inadequately implemented, lacking sufficient capital and technical skill. China’s purchasing power decreased; foreign trade declined; agricultural conditions became worse, in part because of widespread floods and droughts; industrialization made little progress; expenditures for the military continued to be disproportionately large; and unfair and uneconomic taxation continued to burden the country’s economy, notwithstanding the abolition of certain minor vexatious taxes. The situation was further complicated by the threat of inflation which arose with the development of a financial crisis in the last half of the year.
D. China’s periphery:
With Soviet Russia controlling Outer Mongolia and, according to report, exerting considerable influence in Sinkiang Province and with the Japanese administering the four northeastern provinces (“Manchukuo”) and menacing the independence of that part of Inner Mongolia remaining to China, the National Government, in accordance with Chinese practise, handled its relations with the border races ineptly. Establishing in April an autonomous government in Inner Mongolia in Chahar and Suiyuan Provinces, it so delayed in implementing the promises made in connection therewith and was so dilatory in attempting to check Chinese activities repugnant to the Mongols that whether the National Government could retain the loyalty of the Mongols was a question. The National Government moved even more slowly in efforts to regain prestige in Tibet following the death of the Dalai Lama in December, 1933, the chief measure undertaken during 1934 being the despatch of an emissary supposedly to prepare the way for the return to Tibet of the Panchen Lama. No competent action was taken to bring Sinkiang Province under the influence of the National Government.
E. Western nations:
Officials of the National Government continued to be as perverse as previously in negotiations over questions pending or arising between China and the United States.
Chinese realization of the futility of expecting Western nations to assist substantially in extricating her from her problems was deepened by the preference of the League of Nations for Turkey rather than China as a non-permanent member of the League Council and by the failure of the League to return Dr. Paul Rajchman to China, presumably because he is not liked by Japan, and also by the belief [Page 348] that the acute financial situation in the latter part of the year was primarily due to the silver policy of the United States. At the same time, China realized that even were Western nations willing to extend substantial help, Japanese opposition to such aid would be difficult to circumvent.
There was some evidence, particularly in the case of the murder of the American missionaries, Mr. and Mrs. John C. Stam,56 that the communists in China were adopting a policy more anti-foreign than formerly because of assistance allegedly given by foreigners to the established régime of General Chiang Kai-shek.
Respectfully yours,