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500,000 in the North alone. A small but highly efficient and mechanised army is already in being and will be ready to fulfil its special tasks in the later stages of the war. The peasants' economy and industry have created a new self- sufficient food basis for continued war, and the new indus- triai co-operatives and centres, inaccesible to attack, are being adapted to the new conditions of the war. The finan- cial structure holds firm. (One important factor here being the augmented flow of foreign exchange sent back to China by the millions of overseas Chinese).
Japan's losses are China's gains.
Japan spends 4-5 dollars to every one expended by China. She has lost 20% of her export trade, her imports have been forced down by 38% in the one year 1938-1939. Her national debt has risen to 20,000,000,000 yen ! Gold reserves are approaching the vanishing point, and as for credit: the Japanese 5% sterling loan of 1907 now quotes at 38 as compared with the quotation of 92 for the Chinese 4 loan of 1908 on the same market. Her casualties are estimated at over 250,000 men.
With a smaller population, a lack of raw materials and a more delicately balanced economy these losses are much more serious for Japan than the corresponding losses suffered by China.
It is these facts that inspire China's confidence of
success.
There can be no question of China's relinquishing the struggle before a final victory, for today her unity and determination to fight on rests not only in the will of her leaders, but in the armed masses of the people. On the eve of the invasion the policy of the United Front based on the principles of Sun Yat Sen, mobilised the whole country. The adhesion of General Chiang Kai-shek and his followers to this policy immediately after Sian, was decisive. It compelled even the pro-Japanese to join the national defence bloc and even brought in those who thought that a deal with the anti-Comintern bloc was safer than co-operation with the democracies.
In spite of the failure of the democracies to help, China fights on undeterred, and the united front is stronger than ever.
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These are the realities of the situation in China. policy of"appeasement" in the Far East must take account of this. Peace can only be established when China is free.
JACK CHEN
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