CO129-567-4 Traffic of arms to China and Japanese air-raids on Kowloon-Canton railway 3-1-1938 - 3-5-1938 — Page 197

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2.

Even if Japanese claimed what are believed to be their nearer objectives their approximate territory would still be bounded by a line running from Paotou to Changsha and thence to position covering only about one-fifth of the country (excluding Tibet and Sinkiang) enormous forces would be necessary and enormous risks have to be taken if they were to proceed further. Let us assume every vestige of central government control gone in occupied area even including the port of Canton:

Japanese

a crash of the entire in full control of customs, salt etc: financial structure based on revenues reserves and credit of central government. Even then I do not rule out possibility of a central government under leadership of Kuangsi group continuing to function effectively (by Chinese standard) in the rest of China. I think they might well succeed in "rational organisation" of this remaining territory maintaining a fighting force which while [2 gps. omitted] effective attack would make establishment of peaceful government by Japanese puppets in

So long as there neighbouring provinces exceedingly difficult. is an effective (Chinese government in any part of the country claiming to be the government of China it must attract better elements and prevent drift towards any bogus organisation.

If I am right in this view then whether or no we supply

and Chiang Kai-shek with arms/financial assistance and whether or no we discourage its will to fight there will still remain a central government in lineal succession to government which we have recognised and in more or less effective control of four-fifths of the country. If arms and financial assistance were available

government would be by so much stronger.

I do not suggest

we should provide this government with any special facilities

but