THIS DOCUMENT IS THE PROPERTY OF HIS BRITANNIC MAJESTY'S GOVERNMENT
FAR EASTERN (CHINA).
CONFIDENTIAL.
[F 761/84/10
Mr. Eden to Mr. Howe (Peking).
January 18, 1938.
176
SECTION 1.
Copy No. 134.
(No. 41.) Sir,
Foreign Office, January 18, 1938. THE Chinese Ambassador asked to see me to-day, when he said that he had come to report the outcome of the conversations which he had had during his recent meetings at Amsterdam with Sun Fo. Dr. Sun Fo had left Hankow only a day or two before Christmas, so that his information was recent. From this it appeared that Soviet Russia was now giving a very considerable measure of help to China in war material and in personnel. The Ambassador mentioned in this connexion the figure of 300 aeroplanes, which he said had recently been supplied. He also explained that certain new methods of communication had been opened up, which had proved successful. As one instance, he told me that the aerodrome at Lanchow, which was on the route by which aeroplanes had been travelling from Russia to China, had been reconstructed in order to allow the landing of heavy bombers. Previously, several of these had crashed in an attempt to land on an aerodrome which was unsuitable for them. Now this had been remedied with the result that heavy bombers were reaching the Chinese. The Ambassador also repeated that the help which China was receiving from Soviet Russia in personnel was now considerable. In strict confidence the Ambassador added that he could tell me that Dr. Sun Fo's real mission was to Moscow in connexion with Soviet help to China. In thanking his Excellency for his information, I remarked that we had previously heard reports of increased Russian assistance to China, though not from him, which had not been confirmed. The Ambassador emphasised, how- ever, that on this occasion he was absolutely certain of his facts.
2. Speaking of the progress of the war generally, the Ambassador said that the Chinese Government had made the mistake of throwing too many men into the fighting at Shanghai. The result was that their casualties there had been enormous. His Excellency quoted a figure of 300,000 killed and wounded. After this holocaust, the Chinese armies had been unable to hold their carefully prepared defensive position between Shanghai and Nanking. Now, however, that they had enjoyed a breathing space, the Chinese armies had largely recovered their strength and, indeed, the total number of effectives under arms was now about 70 per cent. of the maximum reached in the earlier stages of the war. The financial situation, however, gave cause for considerable anxiety. The receipts. of the Chinese Government now amounted to no more than 20 million dollars per month, whereas their expenditure amounted to between 150 and 170 million. dollars per month. As a result, more than a third of their reserve funds had been used up. Since the maintenance of the currency was a matter of vital importance to the Chinese Government, the financial position was a serious anxiety to them.
3. Speaking of the international aspects of the Far Eastern situation, the Ambassador explained that he thought there had recently been a divergence of view between the navy and the army in Tokyo. The navy, who had had so far no glory as the outcome of the war, were anxious for a venture to the southward, which would involve an attack on Canton and a serious risk of complications with the British and perhaps even with the Americans. The army, on the other hand, were anxious to pursue military objectives on land, even though this might well involve them in hostilities with Soviet Russia. The army, his Excellency thought, had won, probably with the aid of the civil authorities. In consequence, there was an increased likelihood of Soviet Russia becoming involved in the hostilities.
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