CO129-571-7 Sino-Japanese War- bombardment of road from Anglo-Chinese border to Canton 9-1-1938 - 28-1-1938 — Page 16

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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

in full control of customs, salt eto: a crash of the entire

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 neighbouring provinces exceedingly difficult. so long as

there 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 Chiang Kai-shek with arms and 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 I do not

agree