CO129-567-4 Traffic of arms to China and Japanese air-raids on Kowloon-Canton railway 3-1-1938 - 3-5-1938 — Page 196

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197

From CHINA.

Decypher.

Mr. Howe (Shanghai)

3rü February 1938.

D.

(Wireless)

3rd February 1938.

R. 9.30 a.m.

3rd February 1938.

No. 226.

SECRET.

My telegram No. 223 andr. Mackillop's telegrams

Nos. 76 and 89.

Military Attaché believes central government to be finished. Mr. Mackillop, who does not go so far, thinks

they will crack when forced to leave Hankow if not earlier but does not foresee subjection of China as a necessary

concomitant.

My own views are these,

If Powers stand aside completely central government may well crack before economic and financial pressure compels Japan to relax her grip. Moreover it is possible but by no means certain that if we were to encourage China to make peace

with Japan on any terms they might lose heart and seek to negotiate. But this would not necessarily bring about peace.

Whatever may happen in North, Southern leaders will not easily accept Japanese domination nor will they agree to any terms recognising economic or political domination of the

North by Japan. I think that if Chiang Kai-shek were to endeavour to make peace on such terms Kuangsi generals would assume control and would have behind them not only sympathy of vast majority of Chinese but some of the best organised forces in the country i.e. their own [gp. undec.] men and Communist troops.

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