CO129-592-6 Reports on current situation- including weekly intelligence reports 18-9-1945 - 20-12-1945 — Page 42

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to stage a coup d'etat even without calling upon their regular troops, which they llege number between three and four hundred thousand, surrounding SILANGHAI. This contention is borne out by reports submitted immediately following the surrender of Japan, when there was news of Communist troops proceeding from the FOOTUG are...., the eastern district of the Settlement, YANGTSE00, and that the Japanese were said to have sold numerous small arms to the bad element in YANCTS:1:00. There re indications that these small arms are now in the possession of the Corriunists, who also made priv. te r ids in the area roughly north of Lay Rod Creek, with the sole object of confiscating arms and v lu.ble objects.

It is said that tho Comunists have informed Gen. TAN DI PAO that they might tako drastic action in spite of the fact that he cl. ims to have a plan of defence 1 id for SINGAI.

Regarding the attitude of the Communists towards the foreigners in SNG AI, it is reported that they have said that they were no more anti-foreign thin the Central Government forces, although they admitted that the support by ARICA to CHALANG KAI- did not exactly inspire then with pro-foreign sentiments.

The possibility of compromise between the

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Communist party nd CHIANG KAI-SIIN was not considered to be real in view of the proposed reduction in the Comunist divisions. Should AO reach an agreement with CHIANG KAI-SILIK it is possible that loc.1 lenders would continue os ct present until, a successor to 140 had

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risen.

There is is yet no admittance on the port of the local Communists that they re connected with the U.3.3.R.

nd there is no indication t they re linked in any way. There re, however, many U.S.S.R. agents in SILAMOTAI. One of these is reported to have said that this country did not recog- nise Chint. as one of the great powers, and in view of the fact that she was incap.ble of looking after herself, that the Soviets might be compelled to restore peace and law in Chinc. should hostilities break out, in order to protect potential Soviet interests.

If the AMERICAN withdrawal in February does in fact t ke place and the Chungking Goverment have by that time not made adequate provision for its occup tion and parrisoning with competent troops, a definite threat to British interests and British nation ls may well arise.