893.00/3–2147: Telegram
The Ambassador in China (Stuart) to the Secretary of State
[Received March 21—6:17 a.m.]
620. Following is Embassy’s comment on Shanghai’s 476, March 17, 2 p.m.,30 requested in Department’s telegram 321, of March 18.
Although Government forces have suffered serious losses in Shantung campaign, their position there at present time cannot be regarded as “critical”. Best available information indicates that two divisions were lost west of Hsuchow in early phases of campaign and that three divisions were lost in later operation south of Poshan following fall of Linyi. It is not believed that at any time during Shantung operation there were more than three Alpha31 divisions involved. One of [Page 73] these divisions was badly mauled south of Poshan but good proportion of its personnel succeeded in escaping to Tsinan. There is little question but that Communists acquired considerable equipment as result of these Central Government defeats but there is no reason to believe that any large units went over to Communists intact.
At present time it seems clear that Central Government forces advancing south from Tsinan have made contact at Taian with other Government units advancing north from Hsuchow and it appears likely that Government has capability of clearing Tsin-Pu railway line in Shantung. It also seems probable that Communists are holding an escape corridor between Tehchow and Tsanghsien for withdrawal of their forces from Shantung to Hopei. Once this escape corridor is closed, Central Government forces should be able to control Tsin-Pu throughout its entire length.
With regard dismantling of Chiao-Tsi railway, Embassy is reliably informed by an American adviser in Ministry of Communications that Central Government controls less than 100 kilometers of the line. Orders have been issued to dismantle a 60-kilometer section extending from Tsingtao in order to deny any possible use to the Communists. It seems probable that the rehabilitation of the Chiao-Tsi railway will be abandoned in favor of the Tsin-Pu railway where the Government’s military position is more favorable and it is possible that any equipment salvaged from the former line may be utilized on the latter.