INTELLIGENCE HIGHLIGHTS NO. 58 6 JULY - 12 JULY 1949

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01082A000100020003-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 12, 2016
• Document Release Date: June 13, 2001
• Sequence Number: 3
• Publication Date: July 12, 1949
• Content Type: PERRPT

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COPY N0. 1
FAR EAST/ ACIFIC BRANCH
OFFICE OF REPORTS ANID ESTI tATLS
CENTRAL INTELLIGENCE AGENCY
NOTICE: This document is a working paper, not
an official CIA issuance. It has been oo-ordina-
ted within ORE, but not with the IAC Agencies.
It represents current thinking by specialists in
CIA, and is designed for use by others engaged
in similar or overlapping studies. The opinions
expressed herein may be revised before final and
official publication. It is intended solely for
the information of the addressee and not for fur-
ther dissemination.
Copy for:
'Chief . B/
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OFFICE OF R: POR TS .AND ESTI]A'i`ES, CIA
FAR EAS T/PACIFI C RRA'1C1I
I21TELLIG]'t'CE 1110T Gi=TS O. 58
6 JULY 12 JULY 1949
S' CT'IQN 1. SUT.f".'ARY OF FAR ,ASS TREr1IDS AND PEVELOP''?Ef I
Chiang Kai-shek and Philippine President Quirino, meeting in the
Philippines,Aa Pacific UnPU-ion (p. 2).
Recent Comi'n nictm inspirerd demonstrations against mass dismissals
have failed to win public support. Japanese efforts to exploit the
political repercussions of the mass dismissals may be expected to
place considerable pressure upon SOAP especially if lack of improve-
ment in economic conditions results in a reversal of public antipathy
towards the Comriunists anti-Yoshida offensive ( p. 3 ).
People's Army continues troop concentrations in border area (p. 4)~
In China CCP Chairman Mao,, in explaining his concept of a "democra i.c
dictatorship", told the Chinese people that they wo;ulti anon he living
under a notice state and that China would follow the path of the USSR
(p. 5). The l1eetinr, of a US consular official in Shangh .i was the iatost
meaAfestation of anti-foreign feeling in that city; anti-foreignism ha
now developed into a struggle between local Communist authorities and the
US Consulate-general (p, 6).
Republican leaders, recently returned to Jop; Jakarta, are improving
their position
(p. 8) .
Bao Dai's weak cal-inet and fa;.lure to visit llanoi further depress
his chances of success (p. 8).
New Phihul Government is encountering considerable oppnsi tion in
Parliament to a vote of confidence (p. f}) .
The 11arginal notations used in succeeding sections of this 1+eekly
("A", "B", or "c") indicate the importance of the items in B; FE opinima
with "A" representing the most important.
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3CTI `td it. DEV Ln !'--J' 'r t'` SPEC IFtD AR!:i S
C t;"E t L
11,- l ne statement recce nds Pacific u. c -a-rin 1.1 July, i'h`.iipp:.ri 9.`A
President _i :idic lu .end Gemairali+eer Chiang jai--ehzak in a joint
statement, reecos ended the formation of a Pacific union to "ocntaiar and
counteract" Ccm oun:im." The statement was issued following two days of
talks at Baguio, in the Philippines, to whith Chiang had flown at his
mm request t^ discuss 3ino- Philiposi.ne affairs and relations of the two
countries wit:; ot1 er Pacific nations? -ccording to press reports, Chiang
and ' uirrino agree in their conference that the Philippines, China, and
the Republic of 'area Wil form the nucleus of the proposed anion z.nd thit,
representatives of other P-?cific countries, Including the 1f::S, shous_!i `e
invited to participate in ra preliminary international ccmfer a to '. on ider
aspects of its formation.. Since independent attempts to obtain defirdtes +' S
ccamitment .. ve been unsuccessful, the three principals apparently hope to
exert Ares tire upon the through a c ol.leective approach.
P. Pacific pact, was first proposed in lustralia last 141arch0 The proposal
me further stimulated by "Yesi ~Ie n . - uirino later the same .nonth w}ten he
urged the to take the `lead In the Far ':act and not a mcentrete: :ear or.,-
-tire attention Europe;*, president Rnee of Korea almost Immediately
echoed the mica,. The upon whc the ulttt ate success rf ttm plan rest,,,
Clearly indicated last '';iy that At eras not cidering a defer?s.ive pact
for the Pacific along tie lines of the Atlantic Pact. ? oweerer, the US .has
expressed more recently "` ery a path with and interest in efforts of
peoples of the Pacific ar* a to de velor, close a eratiYe relationship and
to mm e toed corinm c.onve,1 and mutual assistance on the vital problems
of the area "o-iti+out t'` se.:p?ort, a Pacifin mion would 'robably develop
into a pressure group eezpen5.inr its effort;, at obta ininjr `'S aid rather than
pressing teed posi,t,Ive achievement within the limits of 41-ts own strength,,
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of rjas disai,ga _qLqWt ted--?decent Commist- new
inspired demonstrations against the Ja anese Governmentse mass dismissals
have failed to in public support. The first political assassinatin since
the end of the rear coming on top of scattered violence has tended to
alienate public opinion despite sympathetic mass opposition to the occu-
pation-required dismissal program which violated the custom-based pater-
nalistic pattern for avoiding largeyscale unemplc went. Every political
group in Japan from extreme right to extreme left may be expected to ex-
ploit, at the expense of the occupation, the forthcoming dismissals ex-
peeted to total close to 170,000 by the end of September.
Leading the drive on the right is the conservative party of Premier
Yoshida which sees or_ the labor unrest aggravated by the mass dismi a gals
an opportunity to unite conservative forces in Japan on the basis of anti-
communism and to consolidate conservative political pover through the
strengthening of central government authority especially in police matters.
To the extent that such steps promote increased governmental stability in
the short run, the Yoshida Government may expect to win eagerly desired
independence from SUP control and modification of SCAP instituted reforms.
Both the center and the left are basing their political strategy on
attacks on the Yoshida Government. In the face of occupation responsi-
bility for measures unpopular with trade union elements, the center parties
have little choice but to attack both the conservatives and the Connnunistr
Such tactics are likely to heighten the factionalism evident within these
parties and by hastening the probable rupture between right and left,.fur-
ther weaken the influence of the center.
COn the extreme left the Communists may be expected to time .utux move-
ments to*masintze the effects of the coincidence of tl:e mass dismissals
this aummcr and the Soviet return of Japanese Pi's, manY of them converted
to Coanism. Furthermore they racy be expected to utilized alleged gov-
ernment repression to maintain pressure for the formation of a joint front
of left ring political and labor organizations.
In view of the unlikelihood of an early amelioration of widespread ec-
onomic hardships in Japan, some reversal of present public attitudes to.
wards the CammUnjsts' anti-Yoshida offensive is not improbable. In such
an event, the capabilities of the Japanese Government to meet labor re-,
aistance to the roduotion-ire-force provisions of the stabilization pro-
gram vdthout additional SCAP assistance may be in question. SCAP may then
be faced with the following alternatives: (1) to permit strengthen of
internal security organizations at the risk of discredtting post ar pc,
lice reforms, (2) gt'anting additional funds directly allocatable to rock
relief projects, or (3) bourn Pending attainment of goals of Japan@ s
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economic recovery, not likely in the foreseeable future, the cost of
mainta3 ring an orientation to the US may ')e expected to renain high.,
gmu
?mgpl l.racy Troop Moy nt&-Recent reports indicate that the People' .=
ArzW is contiu 1n- to move into positions closer to the 38th parallel.
Headquarters of the Second Division is believed to have moved from
Ham-
hung down to ^onsan on the east coast with subordinate units deployed
further south along the Tionsan-Seoul corrider. Reported movement of
elements of the Third Division from the northeast port of Nanam to llam-
hung may indicate the entire Division will come south to positions va-
cated by th. Second Division,, On the west coast, Headquarters of the
rirst Division reportedly moved in ?ep from Pyongyang to Sari%on, only
30 miles north of the border.
Although some of these movements are not confirmed, they are logical
steps in further conaolidatinL, People's l u-,7 administrative and tactical
control of tie border area Cith the People* s Army moving into closer
support of the North Korea Border Constabulary along the para: .el, the
prospect of major border incidents Is increasing and it is prob:.ble thn.t
Peoples Army troops may join with the Border Constabulary in border bat-
tle: against Republican troops in the early future.
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CBI
Chu rasa MO outlines his Palioe State. XtO Tse-tung, Chairman and *A"
recognised leader of the bins. Con +et Party (CCF), in a I Ju article
~cee22,/ebratiug the /2-8th anniversary of th~e~y founding ,off the Parrty,s~~explains the
?pt Of ad~WQtio dictatorship." and inl era LLB A J _4 it O _ n[' i
eo
Z
is
p
Chins that, for their own good, they will be livin
under a ri
id
li
g
g
po
o.
Otatir. MAO** article, composed in the slogging didactic style of Comrade
ta..fn, 49 apparently addressed to an unindoetrineted audience ("young com-
red i whO have just joined the Party and bave not read llarxcisa"Leniniam" ),
and is at orthodox as if it had been written in the Rrenlin. There are, however,
five retoronces to "world Coissmismr" a prospect which Soviet spokesmen are
too tail to mention,
promises, of course, that the State will eventually *wither
arora but .that, until the advent of "world Conan," every effort
must be made to strengthen it, especially its instruments of Coercion and
punishment. MAO admits that the charge of the opposition--s"lou are dicta-
torial"--is corrects "!es, dour gentlemen, you are rights we are really
that way." .The "democratic dictatorship" is a dictatorship of "the people"
over the."reactionariee." It is, of course, the COP alone.which determines
who an "the people" (those supporting the CCP) and who the "reactionaries"
(those opposing the OCP).. This dictatorship, which must 8ateguard the revol-
ution so lont as it Is threatened,by "imperialism, dOmestio reactionaries,
and classes, takes as its first task that of "strengthening the people's
state apparatus," particularly the "people's army, people's police;
and people's courts." MAO also sig eats the tote of uncooperative and unre-
pentant "reacti one Las*"concentration camps dad. slave labor.
TlUroughout his article IKO reaffirms the CCP's fidelity to Moscavr,
acknowledging the CCP's debt to Marx, 1nge1s, Lenin and Stalin, and aora-
miserating with those Chinese scholars who "sought truth in the West" but
were disillusioned by "imperialist aggression' ; this is also a warning to
pro-Western ? Chinese Intelligentsia. MAO admiringly traces the growth of
Soviet power, credits the USSR with being the "main.fbroe" in World War 11,
and states that the postwar policy of the US confirmed the CCP in its
decision tp, u4fte its forces with those of the USSR, its satellitesp and
Communist Parties everywhere. ISO repeats the frequent assertions of CCF
leaders that there is no "third road," that one must join either the forces
of-"imperialism" or of "socialism," and, probably in preparation for a
more active and open Soviet role in China, explains that the revolution
in China could never have succeeded without help from those "international
revolutionary forces" to which the CCP has bound itself,
n grave to China's economic problems, MAO correctly foresees a
grave problem... (in) educating the peasantry" to accept collectivization;
nevertheless it will be done, because, as the USSR discovered, it is essential
for "complete and consolidated socialism." *0 admits that China at present
"depends on foreign countries economically," but, perhaps anticipating
an effort by the West to exploit that weakness, dismisses as "childish?
p
a
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the notion that the Xi' program f'. 3r China cannot succeed without USN-U7
aid cr that interested assistance from such sources is conceiva.ble,,
The alternative, for Chi aa, is to follow the path of the 41 SSS2, i . H f: r?
the State to extra :t the maximum surplus value from every element of ChirMv-
societyThat is what MAO proposes: "The Communist Party of the i.~ SP
is our best teacher.%
Communist Anti-for?eigrai sir-?-The recent arrest and t rree-day detention of a US consular official by Shanghai police, during which: tine the ftmerican
was " utterly beater ,4," elinaxes a series of recent anti-foreign manif estati ;ins,
Since shortly after its capture, Shargha.i has been the focal point of
ent-i=foreign incidents which have been hi-ghlighted by Communist-tolerated
coercion of foreign businesses by labor g;-oups out for profit and to
settle old grudges;. }however, with the beating of a US official by Communist
police, the anti-foreignism which the Party encouraged but in which It
was not directly involved and could later disclaim, spilled over to include
Comrm.3nia t. officialdom and became, thereby" a Party responsibility.. The
Party press and radio nave thus far been media through which anti fc rei rata
feelings were spread,- e< ,, when the British vessel. Amethryst., wac shelled
in the Yangtze, the Communist press and radio charged tars ;sri nisi, had
opened fire on Cor;rmuni st troops after "i.ra- reading" witriouxt Communist
mission') upon Chinas ""great inland waterway" and prorrised that. the Com-
munists would always protect the ?territo.rial sovereigz