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December 9, 2016
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February 16, 1999
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January 19, 1949
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'Approved For 'Release 10 TAR ERST/PA01101C amen orrice;? or mums ,au TSTIVATES Cana inuauesvos SAM" ,icietnio NAM, 110TICS, This document is a working paper. ROT an arraal CIA /*manceand has not neeessarily been eeordinated with *the; ORE produoing components It represents -currant thinking by one group of specialists in CIL, and is designed for use by attar* engaged on similar or overlapping studies. The opinions expressed herein may be revised before final and official publication. It is intended solely for the information of the eddies*** and not for further dissemination? NO. IN CLASS. 1:1 1 0: TS S C SCLAS:.). LASS. CHAN:o NEXT REVIEW DA' AUTK 1R 7 -2 - DATt ? Approved For Release 20 IA-RDP79-01082A000100020026-0 Approved For Release 2000/09/12 : CIA-RD 01082A000100020026-0 MICH OF REPORTS A1D ES?II&TISJ CIA' FAR EAI31/PACIFIC BRANCH INTELLIGENCE HIGHLIGHTS NO. 86 12 JANUARY - 19 JANUARY 1949 25mTioN so SDMMARY OF FAR EAST TRENDS AND DETELOPMEHTS In Korea, both the northern and southern regimes are in priority to the expansion of their armed forces (page 4). CHIANG Kai...shale tottering regime has lost North China and the fall of Nanking and Shanghai appears likely in the near future (page 6). Despite individual peace efforts on the part of many top politicians, no unified peace front has developed in Nationaliet China (page 7), Meanwhile the Government speeded up preparations to evacuate Nanking (page 7), as top Communist MAD Tse-tung demanded unconditional surrender of CHIANG's regime (page 6). The Philippines delegate to the Pan-Asian Conferenoe on Indoneeia has been instruoted to do his. best to prevent anti.mentern developments (page Progress is reported in joint Malayan-Siamese plans to clear their common frontier of guerrillas (page 11). Front& negotiations with ex-Emperor Bao Dai have reaohed a ortie10.1 stage (page 10). Indonesian Republioan officiale remain adamant regarding cooperation with the Dutoh (page 11). margin& notations used n suocee ng sect ons of s Wee y ("A% "8" or "C") indicate the importance of the items in ME opinion with Ite representing the most important. Approved For Release 2000/09/12 : CIA-RDP79-01082A000100020026-0 Approved For Release 2000/09/12 : -RDP79-01082A000100020026-0 CRET -2- SECTION II, DEVELOPMENTS IN SPECIFIED AREAS 4aarmili1ITi Approved For Release 2000/09/12 : CIA-RDP79-01082A000100020026-0 25X6 Approved For Release 2000/09/12 : CIA-RDP79-01082A000100020026-0 Approved For Release 2000/09/12 : CIA-RDP79-01082A000100020026-0 Iht5X6 Approved For Release 2000/09/12 : CI P79-01082A000100020026-0 SE T . A =bar Mr of indications point to an attempt to Luc:ream the North Korean military forms both in strength and numbers. It is learned that recruiting quotas for men and won in the 28-25 age group are to be set up and filled by local People's Army county headquarters. Centers for the training of new recruits are being established. Confirmation of the existenoe of an armored regiment has been received. It is significant that security measures are reported in regard to the accelerated recruiting pram. Inductees are being careDilly screened and only those in complete 6,74PWWwith,the government of the North .Korean puppet state are atsitted to the ranks of the People's Army, It Is highly peesitas that earlier recruits showed some evidence of dissatis- faction and the screening system is designed to keep dissidents out Of the expanding Amy. The People's Army is currently estimated at 50,000 men. Any substan- tial expanalon will fhrther drain the labor pool already seriously depleted ty labor conscription, imprisonaenter the flight of refhgees and the existing military force, Soirreh Kamm SecturAv props ilqrsine slrengt4. Internal and external threats to the security of the Republic have etimulated Army recruiting aid. have caused an acceleration of training with new arms and equipment, The former Constabulary, now officially the Korean Army, is aiming at a strength of 0,000 men, (See DX Weekly #30) The addition of over 15,000 recruits since 24 November 1948, drawn principally from rightist youth groups, has brought the Army's present numbers to approximately 62,500 men. The ATM is being supplied with infantry and infantry support weapons, up to and inehulire 105-mm howitzers. The formation of horse cavalry units, needed to patrol the rugged terrain along the 38th Parallel, has been delayed in order to concentrate on cannon and anti-tank companies Which would be more essential in the event of defensive wag uta with .14 o. .L11:41 4 - 131Ll1alLEM6 Approved For Release 2000/09/12 : CIA-RDP79-01082A000100020026-0 41.0 Approved For Release 2000/09/12 : Cl S ET P79-01082A000100020026-0 um (Cont.) the North Korean People's km. kw expansion has been conditioned be political considerations, There has been an attempt to draw recruits equally from all rightist youth groups. Officer Fast:motions are appointments are made in terms of previous Zapanese or Chinese military =peritonea ard the 4ndividua3.18 influence in various political parties. If the effort at balance is succeasib1 and all grows feel they are adequatelzr represented, the result may be a decrease in existing internal political rivalries. It is moxie probable, however, that the etruggle for political control of the Ar sy will continue to the detri? ment of its unity and combat efficiency, 4.81MVP.= Approved For Release 2000/09/12 : CIA-RDP79-01082A000100020026-0 Approved For Release 2000/09/12 : CIA-RDP79-01082A000100020026-0 SECRET CHINA Nationalists lose North China, fall of $snking and Shan hai imminent. he alines? 'Communist foroes of Gen. LI Piao quietly Valasession of the important North China city of Tientsin fbllawing the capitulation of its defenders an 15 January. In connequence, twelve additional Chinese Comnunist columns have been released which may well be utilised to augment Peiping's present beseigers, thereby enwuring the rapid success of an all-out attack against the city. However, the Oonmuniste, not wishing to pay the price of such a blitz operation or to jeopardize their popular front appeal, probably will not attack the historic city. but tighten their stranglehold instead and force FU Tso-yi to make a "deal. flee, or surrender. Therefore, Peiping's capitulation ean be expected within the next two to three weeks. After Peiping falls, the Communists will have at least eighteen additional columns for further employment elsewhere. The next likely course of Communist action north of the Yangtze appears to be an operation against ill-defended Tsingtao. The capture of Tsingtaowould virtually ensure the early fall of Taiyuan in Shansi, since Taiyuan's major supply route is via air from Teingtao. After Taiyuan falls, the small forces of HU Tsuag-nan at Sian could be dealt with succeesfully by Communists moving south from YEN Bsi-shan's former domain. In Central China the Nationalist's battle has been lost. The Goverment is withdrawing its second-rate, hopelessly outnumbered forces to a defense line along the Yangtze River generally extending from Hankow to Shanghai. Meanwhile. the Communist forces of Gene. CHEN Yl and LIU Po-cheng are regrouping and preparing tocrozs tho Yaagtze. This operation will probably be in the form of a three-pronged envelop- ment with one force moving southeast along the Tientein-Pukou Railroad toward Pukou and Nanking. Another force would move down the Grand Canal and croak the river between Nanking and Shanghai, thence turning west toward Nanking. The third force would more south from the Pangfou sector and cross the river in the vicinity of Wuhu, thence turning east toward Nanking. In the Hankow sector, RAI Chung-hi will continue to be success- fully contained by Communist forces to the north of his position. When Nanking falls Shanghai and Hankow cannot be far behind as PAI will be forced to make a deal or withdraw southward when attacked by a major force. It now appears likely that the Communists will OCCUpy Nanking, Shanghai and all territory north of the Yangtze and east of the Yellow river, with the possible exception of Taiyuan and Sian, by March. Nationalist losses through combat casualty, capture, or defection during the past six months have been slightly over one million men, their remaining combat strength is now estimated at approximately 400,000. On the other handithe Communist armies totalling over 1,500,000 Approved For Release 2000/09/12 : CIA-RDP79-01082A000100020026-0 Approved For Release 2000/09/12 : CIA- P79-01082A000100020026-0 SE ,T a?. men.of increasing efficiency and drunk with victory are capable of driving virtually unopposed, through south Chiza to Canton by spring thereby forcing CHLANG's remnant Government to withdraw to Taiwan. National Government preparations to more from Nankin G in the near "A* future have become increasingly apparent. Canton is the probable ultigate destination for most units. The Communists delay in pressing an towards the capital has gieen the Nationalists the opportunity to effect a more or less orderly withdrawal of the Government, in contradiction to earlier estimates that the flight would be completely disorganized and confueeda Plans for the removal of the archiees of various ministries have been made and personnel, excepting key men, are reportedly being given the opportunity to resign or to be evacueted from Nanking. Preparations are also being made for adequate housing cf the Diplomatic Corps in Canton. This more or less orderly withdrawal of the National Government will make it more difficult for any accredited foreign missions to refuse to accompany the Government to a provisional capital. At the same time, the removal of the archives and the dispersion of trained personnel will keep the Communists from taking over an intact administrative organization in Nanking and subetantially increase their administrative difficulties* The lack of any organised peace front becomes apparent as more and "C" more elements in Nationalist China try to bargain with the Communists for their personal security. Peace overtures on a group and individual basis; rather than on a governmental level, have increased since the Communists refueed CHIANG Kai-shek's bid for peace at his own price. FU Tso-yi in North China has been engaged in peace talks with the Communists on a regional basis. LI Tsung-jen, who had formerly sent emissaries to the Communists in Hong Kong? is now reported to have sent two representativea to meet with the Communists at Shihohiachuang. PAI Chung-hsi, who oontinues to urge the Generalissimo to seek peace, is reported to be prepared to negotiate a truce with the Communists in cooperation with other regional leaders in the Southwest. At the same time, local groups such as the Shanghai City Council are also attempting to take the initiatiee for peace. All these efforts, however, are apparently being checked by a small group around CHIANG. including HU Shih. This clique continues to urge CHIANG to hold out through the coming year, counting on the outbreak of a Soviet-American war to renew US assistance to the National Government. Implementation of the National Government's plan to use Taiwan as an aati-Communist base is stimulating native Taiwanese reeentment against Chinese rule. Recent reports indicate a continued influx of Nationalist military and civilian personnel as well as the transfer of governmental units to Taiwan. Governor CHEN Cheng reportedly will OIJiJILLT Approved For Release 2000/09/12 : CIA-RDP79-01082A000100020026-0 riBt1 Approved For Release 2000/09/12 : DP79-01082A000100020026-0 RET be appointed soon as director of a. Communist-suppression campaign in Southeast China, Taiwan included. In their frustration over conditions of Rationalist military rule, native groups may soon mainifest their resentment of ccutinued US aid to the National Government, for examplee the recent visit of US zuval vessels to Taiwan to unload US ammunition for the Nationalist Army. Dissident leadere,confer with Communists regarding provisional government. LI Chi-shen, head of the Kuomintang RevolutioneVriniMittee, as well as varioua Democratic League and other inor-group representatives have left Kong Kong and Nationalist China recently, bound for Nanchuria9 of for Korth China where a meeting reportedly is to be held at Shihohiachuang. These leader's, many of them intellectuals poesessed of slight political strength or aptitude, apparently feel the time has come to visit Communist areas and find out what their future role in a non-Kuomintang, Communist-dominated provisional goverumentwill be. Mile LI avowedly expects to be "president" and others hope to receive posts at the national or local level, some of the visitors are chiefly concerned with constitutional issues. From the Communist viewpoint, their chief importance may be in furnishing some basis on paper for claining establishment of a "coalition" provisional government. Communists demand unconditional surrender of Nationalists. MAO Tse-tung's official reply to CBIANG Kai-shek's New Year peace proposal was a liat of demands which, if aceepted, would amount to the unconditional surrender of the Nationalist regime. NAO's eight demands were: (1) punishment of "war criminals" (at least 43 government leadere); (2) abrogation of the Constitution (adopted in 1946 without Communist participation); (3) abolition of the Kuomintang's "traditional insti- tutions" (example: the tradition of dating events from 1911, the birth of the Republic); (4) reorganization of the Nationalist Armies (pre- sumably their elimination, or inclusion in Communist forces); (5) con- fiscation of "bureauoratic capital" (a Communist phrase which means all large holdings); (6) agrarian reform; (7) abrogation of "traitorous" treaties; and (8) convocation of a political consultative conference, excluding all "reactionary" (anti-Connunist) elements, and trans- fer of all power from the Kuomintang to a "democratic coalition" (Communist-controlled) government. There is no possibility that the National Government, as presently constituted, will comply with the demands. MOs reply, however, is not more rhetoric. Whether this or any successor Nationalist regime complies or not, and whether the Communist demands are to be realized through peace or war1 it is clear that the Communists intend to carry out this proaramo US Consulate in Tientsin may be isolated. The US Consulate-General in Nukden has been isolated ainc e early November uten the Chinese Approved For Release 2000/09/12 : CIA-RDP79-01082A000100020026-0 Approved For Release 2000/09/12 : C - DP79-01082A000100020026-0 S ? ET e Communist administration closed damn the Consulate's radio. A Co monist spokesman in Hong Kong recently stated that the question of oommunication with the= Consulate in Mukden "is part of the larger question of the US attitude, toward the forthcoming Communist-controlled government of China, and will "depend upon the course of US policy." The U0 Consulate-General in Tientsin, as of the second day of Conmunist occupation, retained the use of its radio and consular personnel had complete freedom of movement, but the political officer of the Comatunist forces told the Consul-General that "as the US does not recognise the Communiet government, there could be no formal official relationships*" While the Communist ofricer did state that "infernal friendly discuseion" and presentation of grievances "would be welcome at any time," it is quite ponsible that the Coneulate- General in Tientsin will loee both the use of its radio and its freedom of movementb and become as isolated as Mukden. Arran ements for resum tion of Sinkian -Soviet trade, embodied In a new ino oviet tra e pact, wil soon be put into effect, according to a report from the US Consul in Tihwa. The fact that the USSR has cooperated in trade arrangements on a goveramental level with Sinkiang represents a major development in Soviet policy toward Sinkiang, Since withdrawal from the province in 1943, the USSR has refueed to conclude any commercial agreement on whatever terms with the Tihwa Government. Resumption of trade at this time indicates Soviet approval of the newly appointed Sinkiang Governor BURKHAN and will greatly strengthen the pro-Soviet provincial coalition government which is expected to result from BURKHAN's appointment* In exchange for the renewal of Sinkiang-Soviet trado which is vital to the saccess of any Sinkiang provincial regime, the Soviets are reported to have secured Chineee acceptance of the Ashan zone of northeast Sinkiang. Outright Soviet annexation of Ashen zone would represent recognition of what has been a virtual fait accompli for the past three years. Since early 1946, Ashan has been conpletely Soviet-dominated and a mining expedition, guarded uy Soviet troops, has been actively mining wolfram in that area. Hong Kong begins direct trade with Chinese Communicts. According to a late report, a Norwegian freigh-773-aari: departed from Hong Kong bound for the South Manchurian port of Antung. Other reports from Hong Kong indicate that a modest commerce with Manchuria, via North Korea, has existed for several monthe. Chinese merohants in Hong Kong have visited Manchuria, according to these reperts, in order to make barter arrangements, since Manohurian and North Aoreau currency is unacceptable in payment. Official figuree on imports from Korea from September through November total NMI 20 million, as compared with HK$ 14 million for the first 8 menthe of 1948, thus suggesting that indirect trade -with Conmunist Manchuria has been gesing on for sone time. ODURUT Approved For Release 2000/09/12 : CIA-RDP79-01082A000100020026-0 trBt1 Approved For Release 2000/09/12 : C DP79-01082A000100020026-0 S ET 40. PHILIPPINES mo dictates cautious li at Asian Conference. Philippine "A" policy& he ew 14113 erence annary, carried out accord- ing to the instructions of President Parini", will be cautious end de- afened to dieceurage the formation of an anti-western bloc. It is probable that Carlos P. Resale, the Philippine delegate, who has promoted the idea of a Southeast Asia union for several years, will hold to the spirit if not the letter of Quirincos instructions. Specifically, quirino is re. parted to have instructed Romulo, (1) to promote the mutual interests of Asiatic eountries within the framework of the UN (2) to avoid westing racial bitterness between Asia and the "'est and (3) to organise with other Asian countries for the helpful support of dependent peoples seeking:the right of self-determination. President Onirino earlier had told US Charge d'Affaires Lockett that although the Philippines sympathises with Indonesia, the formation of an Asian bloc shoald be approached with caution and, if formed, its activities ahead be wisely directed lest the East turn against the Western Powers. He said he expected to instruct Roman to conduct him- self quietly and to let other countries "carry the hall." Ramnle will probably emerge as a prominent spokesman at the conference. He is expected to take a strong stand in favor of a regional bloc which-can exert pressure upon the UN, but he may also be depended upon to counter, as much as he can, an anti-western inclinations of other delegates. INDCCHINA French-Vietnamese negotiations at decisive stage. The French negotia- "A" tions with Baotal appear to be reaching a climax. A l3 January French Cabinet meeting was held to formulate instructions for French High Comais- stoner Pignon who intervieved the former Annamite emperor in Cannes on 16 January. Following this visit Bao Dai announced that he would study the French Government's proposals for the conclusion of a France-Vietnamese agreement. When told that his .prompt return to Vietnamese desired by the French Government, Bao Dai reiterated that this move would depend upon French satisfaction of Vietnamese aspirations. In this connection, General Xuan, president of the Provisional Central Government in Vietnam, recently stated that although the Vietnamese population "ardently" desires the ex- emperor's return, such action is subordinate to the fulfillment of demands far real independence. These demands continue to include Vietnamese con- trol of the Army, foreign relations and finances, including establishment of a new currency which will not be tied to the French franc. The French Overseas Minister in contrast, has stated publicly that, although the new Vietnamese state should have full internal sovereignty, there mast be a amieraiihria Approved For Release 2000/09/12 : CIA-RDP79-01082A000100020026-0 Approved For Release 2000/09/12 : CIA- 79-01082A000100020026-0 SEC -U- INDCCHINA. (continued) certain limitation imposed on external sovereignty "to assure the coherence and efficacy of the French Union." It is apparent that 30 far as Bao Dai is concerned, the decisive stage in negotiations has arrived. Mile the French remain optimistic, there are no indications either in France or Indochina that an agreement with Bao Dai can be reached which will in any substantial way improve the shaky French position in Indochina. SIAM British and Siamese coo orate on control ol_inlagtaLt!Inds. Efforts by the Bri sh ads strat on of aya to effect closer Siamese coopera- tion in the control of Communists and bandits on the Malay-Siam border are meeting with some saccess. A joint conference held last week in southern Siam resulted in a nine-point agreement which established the basis for =Change of information and maintenance of military liaison. In addition, the Siamese have been invited to send a group of officers for jungle war- fare training in Malaya. A subsequent conference has been scheduled to 25X6 discuss a Customs program for the common border. INDONESIA Dutch fail to win sue.ort of lead R,, blicanth Statements by intern*. Repub an Premier Matta who was v sited on Bangka Island by the Security Council's Good Offices Committee, confirm the Republic's will to resist a settlement on Dutch terms, His stand, and that of other officials, indicates that the present Republican policy of guerrilla activity and noncooperation on a political level will be caitinued, For- mer Premier Sjahrir, released from internment in Sumatra in order to con- fer with the Dutch Prime !qnister visiting In Batavia, told Republican colleagues that he had accepted the Dutch invitation only to obtain infor- mation on the internal situation. A few non-RepUblican leaders, while un- willing to oppose the Dutch openly, have agreed to use delaying tactics to prevent the immediate establishment of an interim federal government. The Premier of the pro-Dutch State of East Indonesia, who has the support of Republican aympattizers in areas outside the Republic, is one of the leader; in this movement. 4mi0eSfliffm? Approved For Release 2000/09/12 : CIA-RDP79-01082A000100020026-0 Approved For Release 2000/09/12 : CI 79-01082A000100020026-0 INDONESTA (continued) The inability of the Dutch to MOM'S competent personnel with which to staff an interim goverrvaent, together with an increase in the nuaber and intensity of Republican guerrilla attacks on Dutch communications and properties, will cause considerable internal pressure on the Dutch at Batavia. taternel pressure will continue to be exerted by Far Eastern countries at the New Delhi eonferenee, and, perhaps, by Security Council action. ? SE Approved For Release 2000/09/1 IA-RDP79-01082A000100020026-0