FAR EAST / PACIFIC BRANCH WEEKLY SUMMARY 1-8 DECEMBER 1947

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A004600010003-7
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 27, 2016
• Document Release Date: March 12, 2013
• Sequence Number: 3
• Publication Date: December 8, 1947
• Content Type: REPORT

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C. I 12A5 -
FAR LAsT/Itpun BRANCH
'k 3r
178 ocember
? GLNLRAL .
ECAK: CONFERENCE ?
8 Detember 1947
United Nations Economic Commission for Aaia and the Far Last, weting in
Baguio since November 24, began serious consideration of Asia /5 needs after
lengthy debate on seating the Siamese and Indonesian delegations. Although
seated by the Commission, with the reservation that such acceptance did not
imply recognition of the new Siamese regime, the Siamese delegation tithdrew
from the conference alleging that Siam had been *lighted by iS21203 oaised in
the prolonged discussions. The delegation of the Indonesian Republic also
withdrew after the Commission postponed consideration of its status.
The absence of Siam from the conference, will, no doubt, dooreavo the
chances for success of any solution to the food shortage problem existant in
the Far Last today because Siam is one of the 2j4CW ourpluz ries areas capable
of contributing to the alleviation of this problem
Monnett Davis, Chief of the US Delegation, on December 3 presented a ten-
point program, emphasising increased production and more equitable distribution
of foodstoffs, to implement EChFE objectives. He remained non-oomlittal on the
question of US assistance and reportedly stated he believed Asian nations, could
with proper assistance, pull themselves up with their own bootstraps to an ex-
tent not possible in Euxope. This statement was in striking coatrast with
President Roxaool opening address calling for a "Morahan Plan" for Asia.
The Commission, on December 4, voted for a c;:;nxe.hensive survey of foed
supplies and agricultural resources of participating nations. The pooposal
calls for regional self-help and a freer exchange of commodities in the Far
East.
FAR LAJT.RN Gel:INFORM
Highly questionable sources continue to report the formation of a Cooinform
in the Far Last. Uosquito rewspapers and news organs controlled by the right
wing of the Chinese Kuomintang have stated that a meeting of the Fa o East Comia-
form has already been held, with the headquarters alternatively reported as Har-
bin, Vladivostok, and Khabarovsk. r1,7st of these reports ascribe a loading role
to the Chinese Gomm-list Party. However, the US Embassy in Moscow has expreesed
the opinion that the Chinese Communist Party would not be likely to take the lead
openly in organising the Communist parties of the Far East until after complete
consolidation of Chinese Commhnist control in Manchuria, still in the indefinite
future. In any event, very little credence can be given to aucro reports until
some said confirmation is forthcoming.
Document No. 00 1
NO CHANGE in Class. 0 Affigraggi
DECLASSIFIED
*ass. CHANGED TO: TS S 7 C
77"'VMMI
?
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763.'
Date: 17 FEB 1978 By:. oil
SECRET
REFERENCE CENT LIBRARY,
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JAPAN
(No
(No contribution).
KOREA
(No contribution).
MILITARY
SLCRLT
NORTHERN DIVISION
CHINA DIVISION
Nationalist forces have made some local gains in the southern part of
Manchuria, but military activity has been relatively quiet during the week
in both Manchuria and North China. In the Shantung peninsula, however, the
Chinese Coirgnurtists have recovered almost all.the points lost to the Nationalists
in the offensive last autumn, with the exception of Chefoo and Laiyang.
According to press reports the Chinese Communist forces undertiu Po-cheng
have launched a new offensive north of Nankow? but itp aim and prospects of .
success eani..bt yet be determined. .
A reshuffle of the Nationalist high command has been in progress for several
weeks, but its final form is not yet clear. .4ihile Chen Cheng, the Chief of
Staff, remains in ceroand in Lanchuria, a new headquarters at Kiukiane on the
Yangtze has been set up under Jai Chung-hsi, Minister of National Defense, to
cope with the newCommunist threat in the Ceetral China area, northeast of
Hankow? Fu TO?yip has been placed in military corinvind in North China as well
as .Inner .Longolia. Apparently Ku Chuetung and Hu Tsung-nan are not affected in
these changee, and. retaintheir military .commands over (1) eastern Tunghai Rail-
way and Shanteing provincei and (2) Shensi province, respectively.
INTERNAL POLITICAL
Election results are still ncomplete:, with the delay in announcement of
results making the postponement of election of the President of the Republic
by the National Aseembly likely. A quorum of delegates will probably not be
assembled until about 15 January 19480 ?
General Fu Tsoli? capable Nationalist Goverracnt general, has assumed his
duties as corriaander?in chief of the "North China Bandit Suppression Headquarters.
His appointment comes on the heels of a J'loyalty purge" conducted by secret
police which undercut the power of the ? Governer of. Hopei Prowince? Sun Lien-chung,
Sun remains as governor but he has no* surrendered most of his military power.
Fuss ability to change the course of military events in North China, however,
remains contingent upon a:number of larger factors.
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.3.
SECIILT
BORDER REGIONS
The plebiscite regarding independence from China, held in Outer Mongolia
in October 1945p pursuant to the Sino-Soviet Treaty, was extenPed to areas
such as Hailar (Manchuria) and Peitashan (Sinkiang) bey the usually accepted
boundaries of Outer Mongolia. The Chinese delegation at Ulan Bator, following
the instructions of Chiang Kai-shik did not sign or certify the election re-
sults, but raised no objections at the time in order not to provoke an incident
and thus risk accusasion of violating the Yalta Agreement because of a minor
piece of trickery. In making this revelation recently to the US Ambassador
Narking, the Chinese Vice Minister of Foreign. Affairs said the National Govern-
ment has merely acceded to a de facto situation and therefore reserves its
rights vis-a-vis any districts outside, the ueall,y accepted boundaries of Outer
MongolI
Whenever it suits Soviet purposed this plebiscite may provide a useful legal
pretext for extending the frontiers of the Mongolian People's' Republic at the
expense of China. The National Governnent's emphasis on the Peitashan incident
of last June is to be viewed against this background,
Sinkiang's boundary is also uncertain near the southwest extremity of the
province where China, Afghanistan, the usrit and India meet. Some maps show that
Sinkiang and Afghanistan touch, thus separating the USSR from India by a narrow
strip of Chinese territory, but other naps show a gap of some 20 miles between
China and Afghanistan. Indian Government circles believe that the latter repre-
sents the true state of affairs, and that, for this short distance at least, the
USSR and Kashmir are contiguous. The whole question is soeewhat academic, howeves
for in this small area the Himalpyas attain an altitudegof more than 28,000 ft
and constitute an almost imiassable barrier between the USSR and India.
ieXTLIINAL PCLITICAL
Significant clients of the week in Chinese foreign relations includeAl?h.ina,
in its reply to the Soviet proposal that a Four Power Conference be helm in
China to consider the Japanese Peace Treaty, reiterated its previous stand that
the composition and voting procedure of the conference should follow those of
the Far Eastern Commission, The Chinese Foreign Minister told Ambassador Stuart
that the Conference could be Mid in China if the otheraWit,agreed, but if not.
it should be in Washington. He further stated:in connection the Japanese '
Peace Treaty, that the US did not appreciate the pressure on the Chinese Govern-
ment exerted by Chinese public? opinion which fears a resurgent Japan, or that
brought to bear by the USSR.
(2) Chiang Kai-shek, in commenting on US policy in Japan, refuted the idea that
the US is supporting the rebuilding of an aggressive Japan. This public state-
ment is of considerable interest-becauee of the numerous expressions by Chinese
public opinion of the fear of a resurgent Japan under US policy.
(3) A Chinese delegate has been named to the six-nation working group of the
UN Trusteeship Committee to make plans for the government of Jerusalem as an
international citr. At the -same time: China was sounded out unofficially by
the US about the possibility of a Chinese contribution to an international
police force if one should be sent to Palestine, but there has been no response
CT' MT.:Yr
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SLCRLT
by the Nanking government. China had previously abstained in the General
Assembly vote on the partition of the4 area.
.(4) Victor Hoo? an ass.ieta:ht eecretaryegeneral of thehUns has been appointed
as head of the Secretariat for the nineenation Korean independence Commission.
?(5) China end the Netherlands -signed- an air agreement at Nanking on 5 Dec.,
. ,
'provieing fpr Opening?couveretal air service between China and Dutch. metropoe
? Iiten and colonial territory?
- (6) China and the -US signed on 8 Dec. an agreement for the tranefer of surplus
naval veeeele.to the Chinese Government, as provided by Cangreesional Act of
16 July 1946e. ?
hCONOUIC
Currensyl To stem inflation the Leecutive !Ilan ia expected to impose now
measures on a nation-wide scale. A top level economic authority, to be headed
by GITA3's son Chilang Ching-kno, is reportedly being formed in an attempt to
restrict bank loans, overdrafts, flow of idle capital, to extend rationing in
large cities and curb illegal exchange transactions. The Central Bank's tight
money pokicy? combined with news of drastic anti-inflation measures, put a tem-
porary halt en prices and black market during the week. Commodity prices declinec
slightly after reaching a peak on 27 Nov, The black market exchange leveled off
from a high of 150,000 on 28 Nev. to 1331,000 on 6 Dec.
EagimaTrade he Shanghai Customs has not relaxed its controls over unite
censed imports sufficiently to induee importers concerned to sell to the Govern-
ment res-Jelee on the Government's proposed deferreldepayment plan. These impounded
imports, reported to be in excess of USWI.elilion? invoice coat., are principally
industrial. izumeterials? and thus urgently needed by China a In the absence of a
compromigAGovernnent payment plan/ which is -expected but not yet in sight, a
majority of the importers are preparing to exercies their option to re-eeport
the commodities out of China.
Exehane_Assets: Another effort to induce the National Government, to call
in ZETWal privatai-held foreign exchange assets has reportedly been made, in
the form of a National liconoreie Couneil proposal to nationalize gold bullion and
foreign currencies. These private reeources are coneervatively estimated in the
neighborhood of USC500 million, with one third probably in China itdelf. How-
ever, obstacles to such a plan would be: (10 lack of support by influential
wealthy Chinese, many of whom occupy key positions in the National Government?
(2) lack of enforcement policy, and (3) lack of general voluntary response/ as
previously manifested. Neverthelees? the Gevernment =ay eventually decide to
adopt a nationalization plan as a last-resort measure. With sufficient pressure
from Chiang Kaieshek himself n such e movj,4aht bring sebstantial sums into the
Government 'a official reserves; even a toke Ace e0% (US00 million) would be
beneficial. General enforcement is possible at least itin China where such
assets could be traced, and pressure brought to bear on "hold-cute."
Aviation: It is reported that Gen. Chennault may obtain a franchise for
a r761177-Coemercial airline? This report, linked in some degree with the
many economic development plans emanating from South China since T.V1 Soong'a
assumption of the governorship of Kwangtung? reveals that this franchise mas
originally granted to a group of Chinese promoters for the Southwest Air Trans-
port Corporation, but has not been used since the war,
rfn ,m
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64 ?
"per
Taiwan Rice: Recent information indicates that rice production in Taiwan
for 1947 will reach about 1.20 million metric tons which is about 90(7., of
prewar on the local market.
SOUTHERN DIVISION
FM:LIU INE ISLANDS
Nearly complete retumn of the Philippine general elections of 11
November indicate that Liberal Party has increased its najority
in the Senate and has retained its strength in the provinnes. According
to the latest official count, President Roxasl party has won seven of
eight senatorial seats and thirty-seven of the forty-five provincial go-
vernorships on which returns are almost conplete. However: nearly a month
has passed since elections were held and the final official count of votes
has not yet been released. Leanwhile coalesced minorities continue to charge
the Liberal Jarty with election irregularities. ,
A possibly significant development stimulated by the elebtione is the
disunity within the Liberal Party. It was noticeably apparent during the
pre-election ampaim when disagreement arose over various gubernatorial
candidates. Since 11 November it has continued with Senate President Avelino
and Secretary of Interior nulueta leading opposing factions. Although the
eituation is not out of hand: it tends to have a weakening effect upon the
party.
BURMA
A Chinese lAinistry of Interior spokesman has recently announced that China
intends to claim the undemarcated territory: between Yunnan Province and
Burma bounded by Kungshan Pass: the Hulaming River, and the Patkai Range.
He based the Chinese claim on the historical evidence that the area belonged
to China a thousand years ago. This claim would be difficult to justify but
nevertheless is somewhat ominous because a thousand years ago not only Burma
but also several Western-European countries as well were listed in Chinese
chronicles as tributary dependents of China. The Durmse have often expressed
the fear of Chinese domination and have been deeply. concerned over this par-
ticular border problem. Agriculturally and industrially the area is not
considered valuables but may be rich in metals and gems. There have been
several reports of Chinese infiltration into Burma: and the Chinese could un-
doubtedly move in and take control of the area with little or nor resistance
from the Burmese. The Chinese claim: however: is considered to be purely
"for the record:" for the time being at least, in order to pave the ray for
official negotiations shortly after the Burmese achieve independence.
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