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of the Government administrative staff are members and, although they are The actual encouraged to join, no pressure is exerted upon them to do so. Constitution as it now operates is shown in the appendix.(*)
42. The People's Political Council is a merely advisory body, but, in fact, the Government has carried out all its important recommendations. It consists of persons nominated by the National Defence Council and the Generalissimo, and represents all classes and all political points of view, including about a dozen Communists. The discussions are quite free but not public, nor are its recom- mendations or reports published. I had a description of its working from Chang Po-lin, the much respected head of Nankai Middle School, who is its vice-chairman under the Generalissimo, who is chairman. I append(") this description.
43. The Executive Yuan, which acts as a Cabinet," has a general secretariat which is charged with preparing its material, recording its decisions and supervising their execution. This was described to me by the chief assistant secretary, a very intelligent young man, and I append(") the details.
44. The form of government seems to be applicable to the present circum- stances and is being gradually expanded in scope. While I was in Chungking they were just waiting for the approval of the Legislative Yuan to a measure setting up a Ministry of Agriculture out of what had formerly been a part of the Ministry of Economics.
45. The major political questions which are vexing China to-day are two- fold: First, the composition of the Government, in so far as it reflects the struggle between the old and new China, and, secondly, the question as between the Kuomintang and the Communists. These latter are responsible for the Border Government in the north-west, north of Sian, and have in addition to the Government of that area armies of their own, one in that district and another around Nanking. It is the Communist army which is the most difficult factor. The Communists are avowed supporters of the Generalissimo in his struggle against Japan, but are extremely critical of many of the older type of Minister, especially Dr. Kung, the Minister of Finance; they accuse him, and particularly his wife, of profiteering out of the war. It is impossible to ascer- tain how accurate these accusations are, but they have very general currency in non-Communist and foreign circles. The Communists are anxious for the introduction of democratic Government, and it was following their proposal that the People's Political Council passed the recommendations for the Constituent Assembly, which is being implemented by the Government. Undoubtedly the Kuomintang and the Generalissimo and Madame are afraid of the spread of Communist influence, and, though there is openly no breach at the centre, there is an underlying hostility which has led to the suppression of all Communist activities outside the area of the Border Government and those areas within the Japanese lines where there can be no direct control by the Centre Govern- ment. The one common factor uniting all parties and people is the resistance to Japanese aggression, and, so long as this remains the central necessity, an open breach may be avoided if the situation is handled wisely. The Communists profess a desire to work the democratic Constitution once it is introduced, and personally I believe that they will make this attempt, though how long it will last is another matter. The possibility and even likelihood of an open breach after the conclusion of peace is very great indeed.
46. Before leaving Chungking, and in Hong Kong, I was able to talk to a number of people not directly connected with the Kuomintang or the Adminis- tration upon this question of the antagonism between the Kuomintang and the Communists, and also to make some suggestions which will be conveyed to the Generalissimo as to its temporary solution. There is no permanent solution for it except the free working of a democratic system, and this obviously cannot operate till after the war, even if it operates at all. The Communists allege that they have a million rifles in China at the present time, and they are undoubtedly not prepared to allow themselves to be extinguished without a struggle. The Kuomintang leaders, on the other hand, are trying, by shootings, murder and other extreme methods of suppression, to liquidate the Communists. A great number of moderate people, among whom I might mention Sun Fo and T. V. Soong, are most anxious for some accommodation. The actual technical
(*) Not printed.
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points which have been in debate between the Central Government and the Communists relate (1) to the area of the Border Government territory, and (2) to the size of the Communist army. As to the former the Communists want twenty-four Hsien, whereas the Government has offered twelve; as to the latter, the Communists want three armies of three divisions each, and the Govern- ment have offered three armies of two divisions.(") But these are not the real points which divide them. The actual political demands of the Communists at this stage are not what anyone in the West would call Communist. They are: (1) a democratic Government; (2) intensification of the anti-Japanese drive and no peace till Japan is turned out of China; (3) abolition of feudalism (not of landlordism); and (4) purification of the Administration. All these are equally part of the avowed programme of the Kuomintang, but the leaders of that party are by no means supporters of the actual operations of these policies. Many are suspected of being to some extent in favour of making a deal with Japan and against the third and fourth points, while very half-hearted about the first. 47. The most interesting and, in some ways, hopeful development that has taken place is that in the north-east, west of Peiping, where there is a large area covering parts of several provinces which is being administered by a local United Front Government consisting of Communists, Kuomintang members and a majority of non-party persons of the middle class and of Radical or Socialist outlook. In this area a very full measure of democracy has been introduced locally for the election of magistrates, &c. The system is working very well, and the people are showing both intelligence and enthusiasm in its operation. Unfortunately, the economic conditions are so appalling in this area, owing to failure of crops and Japanese action, that it is doubtful whether this Govern- ment can survive. The report on this area, which is contained in Appendix 2. is of interest on this point.
48. There is, in addition to the Communist opposition, a very considerable body of discontented elements who do not consider that the Government, as at present constituted, is the best from the point of view of the country. All these elements are professedly loyal to the Generalissimo, but are hostile to many of his lieutenants. The most influential leader of this opinion is T. V. Soong, who is undoubtedly a very able man and who regards himself as the last hope of China. He was offered the post of Finance Minister last November, but refused it, as he told me, because he could not also get the post of head of the Bank of China, and he considered that, if Kung remained in that post, he (Kung) would sabotage the work of the Finance Minister. In Soong's view the Government must be reconstructed, or else there will be a complete breakdown. I think that this view is exaggerated, but nevertheless also think--as I told the Generalissimo-that it is urgent for him to change some of his Ministers, especially the Minister of Finance and the Foreign Minister, who has not a sufficiently forceful personality for the job. The Generalissimo is, I believe, conscious of the necessity, but, in view of the need not to antagonise any elements, he is anxious not to do anything drastic. The defection of Wang Ching-wei and the possibility of others-if turned out of office joining him or following his path makes the position a difficult one. T. V. Soong's demands are, I think, excessive, and it is a pity that he refused the offer of last November, as he could have done a great deal to clear up matters from inside. It looks at the moment as if he had lost his opportunity and as if it might not recur. The fact that he lives most of the time in Hong Kong militates against his gaining influence in China itself. He is regarded by those who ought to know, such as Rogers, as a far-sighted and capable financier and is, to some extent, in with the Communists. I do not think that anything will diminish the power of the Generalissimo, who is not an autocrat by nature and who is anxious for democratic methods, provided they do not hamper the carrying on of the war. If greater difficulties come, it will be because many of those around him are reactionary and are not generally regarded as being suitable people to bring the new China through the present difficulties in safety. Any influence that can be brought to bear towards a recon- struction of the Government will, I feel, be of real assistance to China. The
(3) Since I left Chungking the meeting I urged has been held, and a temporary accommoda- tion arrived at between the Generalissimo and the Communists. I saw the telegrams about this in the State Department at Washington, and no doubt the Foreign Office has full information on the matter.
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