INTELLIGENCE HIGHLIGHTS NO. 46 30 March - 6 April 1949

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01082A000100020015-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 12
• Document Creation Date: December 12, 2016
• Document Release Date: June 13, 2001
• Sequence Number: 15
• Publication Date: April 6, 1949
• Content Type: PERRPT

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S ET
FAR EAST/ PACIFIC BRANCIT
OFFICE OF REPORTS AND ESTIU'ATES
CENTRAL INTELLIGENCE AGENCY
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It is intended solely for the information of the
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`ICE OF REPORTS AND ESTIMATES, CIA
PAR EASTf ACIFIC 'BRANCH
INTELLIGENCE HIGHLIGHTS NO, 46
30 March .. 5 April 1949
SECTION I SULI ARY OF FAR E& ;T TRENDS AND DEVELOPMFZ TS
The Japanese Diet has established one committee to probe Communist
activities but is holding off formation of another temporarily (pm 2)a
The size of the armed forces in both northern and southern Korea is
on the increase (pa 2)6
Chinese Nationalist delegates to the Peiping peace conference appear
to be both without.a plan and without the support of all Nationalist
factions (pe 3)4 The Communists, meanwhile, apparently have been success-.,
ful in adding some 600,000 ex-Nationalist troops to their armies (p. 4)4
French military and civilian officials in Tonkin continue to be alarmed
by the worsening of their position in the northern Indochinese state (po 6),
Despite a recent UK "gift" to Malaya, the costs of the anti-terrorist
campaign threaten to bankrupt the Federation (pn 6)
Cabinet shifts in Burma which have eased the tension in Rangoon cannot
be expected to bring an end to present disorders (pn i)o
Dutch opposition to the garrisoning of Jogjakarta with Republican
forces may prove to be the sticking point at the Batavia meeting (po 8)
The minority Naoionalista party is exploiting its "balance of power"
position in the Philippine Senate at the expense of the Liberals (p0 8),,
NOTES A digest of recent reports on dissident activities in South
China appears in Section III()
The marg na notations used in succeeding sed ions of this Vieek y
("A", "B" or "C") indicate the importance of the items in fAE opinion
with "A" representing the most importanto
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SECTION II. DEVELOPMENTS IN SPECIFIED AREAS
WAN
Diet establishop , .....nation Committee--the Diet voted on 29 March to NB"
establish an Examination Committee to replace its Committee on Irregular
Property Transactions, The bill was passed over the opposition of the
Social Democrats, Communists, and the Labor-Farmer Party,, The Communists.,
with customary vigor and phraseology, denounced the Government-sponsored
measure as, repressive and as a revival of the "Thought Police," The .new
Committee is intonde4 to have a wider range of investigatory powers than
tho Irregular Property Transactions Committee which was responsible for
unearthing the corruption that discredited the conservative parties and
the Socialists before the last general election,, Oddly enough, the
Irregular Property Transactions Committee failed the expose a single case
of Communist financial irregularity. The Japanese Government hopes to
employ the Examination Committee to probe Communist-inspired anti-tax
and anti-rice-delivery investments,, Communist-engineered strike activities
and opposition to the economic reconstruction.
Government spokesmen have indicated that the new committee will not
be a substitute for the proposed Un-Japanese Affairs Committee. Formation
of this anti-communist Diet body will proceed slowly due to the Govern-
ment's failure to obtain wholehearted SCAP backing. A further deterrent
is the conservatives? fear that the Japanese Communists? through their
superior' domestic intelligence network, might turn the Committee against
those who created it.
CCP troops in northerrnnKarea - It is increasingly evident that "B"
scattered units previously under Chinese Communist commands; mostly former
Korean settlers in Manchuria, are moving to northern Korea,, In view of
the fragmentary nature of the available reports,, a reliable strength
estimate at present is not possible. However, it is known that the
People's Army has expanded from two to a total of three divisions in the
last six months. Integration of these experienced units into the still
untried People?s Army will enhance its capabilities considerably,
troops from Korea. (See H/FE Weekly #45) At present UNCO1 has two sub-
committees, one to study the working of democracy in Korea and the other
withdrawal. This results directly from the action by 63 members of the
National Assembly in petitioning WCOK to secure withdrawal of occupation
onsider troop withdrawal, - The United Nations Commission on
Korea UPNCOK will establish a sub-committee to study the problem of troop
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LZU (Copt?)
to plan a visit to northern Korea. Neither is empowered to consider
troop withdrawal, although that is one of the overall tasks given U'COK
in its terms of reference by the General Assembly. US Representative
Muccio has also suggested to MNCOK that it might be timely to consider
the question of troop withdrawal. The Comnission?s probable recommenda-
tion for withdrawal of all occupation troops can be expected within the
text two months.
President Rhee, who in the past has opposed withdrawal of US troops
ui it his own security forces are adequate to defend the Republic,
1x oly will not oppose such an UNCOK resolution openly. Instead, he will
increase his pressure on the US Government for additional arms and equip-
ment to continue the expansion of'the Korean security forces.
Consistent with Rhee?s present program'of expansion, the Korean Army
is planning formation of a Cavalry Regiment. Present plans call for the
activation of one mounted squadron at full strength (200 mounts), one
understrength mechanized squadron and requisite service, maintenance and
transportation companies. An armored squadron is also planned, if US
tanks should be made available in the future z.
Except for mounts, the Korean Army cannot equip, train or re-supply
a savairy regiment unless the US makes available all the necessary ordi-
nance and equipment. Furthermore,, the terrain of Korea is not adapted
to the use of mechanized units except in street and village fighting'.
Mounted units, however, could be used effectively both in operations
against the guerrillas in southern Korea?s mountain areas And for patrol
along the 38th parallel.
The northern Korean People?s Army includes an armored unit equipped
with at least 30 tanks and at least one mounted company.
CHINA
Weak Nationalist Delegation Begins Peace Nogotiations Despite
weeks of preparation for a formal conference with the Communists., the
Nanking Government apparently has no clear-cut peace program or strategy
and its six delegates are united chiefly in their confused and varied
hopes for some kind of settlement. Lacking political cohesion and strong
governmental backing, the delegation will probably refer major issues
to Nanking for decision. While leading delegate SAAO Li-tze apparently
favors peace on almost any terms, Chairman CHANG Chihhchung has told
US officials that he Would not accept any settlement involving estab=,
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liahment of one-party government, suppression of individual freedom,
or a strongly pro-Soviet policy,. LIU Fei, Wharipoa general and former
Nationalist Deputy Chief of Staff, was appointed at the last moment
to handle the key issue of military reorganization. and will probably
be responsive to the influence of Premier HO Ying-chin and other Nation-
alist military leaders.
Meanwhile, Nationalist efforts to negotiate any overall settlement
are made more difficult by activities of right-wing Kuomintang leaders.
Meeting recently in Canton under SUN Fo's chairmanship, members of the
Kuomintang Central Executive Committee and the Central Political Council
adopted conditions for an "honorable peace" which are incompatible
,.th the Cozmsnnist demands. These Kuomintang leaders may attempt tc
influence the negotiations and to reject tentative peace commitments by
asserting the traditional power of the Kuomintang over governmental
policies. Although CHIANG Kei-shek. ostensibly is supporting the Nanking
Government's current peace effort, his position as party leader and
his previous espousal of the "honorable peace" concept suggest that
he may support those who oppose any general acceptance of the Communist
demands.
Captured Nationalists Add to CCP Strength-- Interrogation of
t Party
i
C
C
s
ommun
hinese
returned Nationalist soldiers indicates that the
(CCP) has successfully disposed of over half the Nationalist troops who
surrendered, deserted or were captured by the CCP during the past six
months, This total includes 480,000 troops in Manchuria, 235,000 in
North China, and 395,000 in East China. The Communists have retained
about 400,000 of the captured Nationalists for use as individual re-
placements and service troops and about 210,000 dissaffected or surrendered
Nationalists, who, they feel, are more "mature" politically, for use in
combat units.
In the past, the Communist pattern for dealing with such troops
has been to separate officers auove the grade of regimental commander
(colonel) from their units, to inform technicans that they "must serve"
with the "forces of liberation." to assign certain combat soldiers ---a2
or 3 men to a Communist squad--- for use as assault troops and to
give the remainder'-the majority=their choice of remaining with the
CCP or returning to Nationalist areas after a period of indoctrination.
The CCP will probably be able to integrate into their own order of battle
up to 60% of the captured Nationalists and about 90% of the voluntary
turncoats so tong as they are able to feed and clothe theme
Communists shift emphasizes cities - The Central Committee of rga
the Chinese Communist Party C P , in plenary session last month for
the first time since 1945, endorsed the leadership of Chairman MAO
Toe-tunge took official note that the time has come for "shifting the
center of gravity of Party work.. from the rural area to the cities," and
sugested its belief that the USSR will assist the CCP in its primary
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mission of developing industrial production;.,
Orthodox Marxism views the urban industrial proletariat as the
"carrier" of the socialist revolution. Chairman MAO, however, carne to
power with the failure of'Ll Li-can's "proletarian revolution" in 1927?30.
Rejecting such "Leftism," MAO built the CCP upon an organized and armed
rural peasantry. The Central Committee, noting that "history has proved
that this policy was entirely necessary, entirely correct and entirely
successful," implies that LI was wrong not in his choice of doctrine but
in his estimate of tho proper time for its application; only now, this
year, has the period begun for transferring the leadership to the cities
rid for "working from the cities to the countryside."
The Central Committee also endorses MAO's temporarily conciliatory
policy, as envisaged in the "N2gww Demooraoyr" rather than Li's more
aggressive version of Marx-Leninism. Although it is proper to emphasize
the leading role of urban workers, the Party must "unite other laboring
manses,.., the intelligentsia..., the petty and liberal bourgeoisie,..,
and "democratic" personages outside the Party," in order to present a
common front against the immediate enemy, "the imp:-.rialists, Kuomintang
reacticna'ries, and bureaucratic capitalists." Y1ith such a popular
front, the CCP may devote itself to its principal task of "rehabilitation
and. development of industrial production."
The Central Committee notes that "building a new China" will be
even more difficult than winning the civil conflict, a "first step"
which has required almost 30 years. The second step, the Committee
states, will be .facilitated by the establishment of a "People's Democratic
Republic," the leadership of the CCP and "the aid of...the Soviet
'Union,..". The Committee does not speculate on the form which such aid
will take and perhaps nothing more is meant than Soviet contrioutione
to the economy of Manchuria and Sinkiang. It is most unlikely that
the USSR will invest any significant amount of capitu'l in China proper,
or more than a very modest amount in the border areas. Since non-Soviet
foreign capital, either public or private, will be almost impossible to
attract and Chinese capital is limited? the heaviest share of the burden
for financing China-Is industrialization will inevitably be borne by
the Chinese peasantry which has lost its place of primacy in the revolution.
The CCP will be faced with a dilemm which confronted the early leaders
of the USSR--how to make the peasantry pay for a capital expansion from
which it derives no immediate benefit. The CCP's solution-..of large-
scale' forced savings through rigid state control of agriculture--will
be less barbarous 'but no less painful.
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TIMC C HINA
French reinforeom ts, for Tonkin u 1-... French officials in Tonkin,
both teary and civilian an nue their pessimistic outlook resulting
from the heavy mUltary activity in Tonkin along the Chinese border area
and the increasingly daring terroristic attacks against Hanoi, which
present French strength there cannot prevent 'see Section TIT). Recent
reports state that cooperation between considerable forces of southern
Chinese bandits and the Viet '!inh was fol lowed by temporary French lots
of the strategic border town of "o cay, thus further endangering the
French position in Tonkin. The French are concerned over the possibility
of. increasing Chinese assistance to the V .etnamese rebels, particular!p
shin South China falls under the doxsinat'_on. of the Chinese Comumunistz;,
Few French officials believe that, flea Dai's return will lessen re-
sistance by the Ho Chi "inh forces, They insist that the former emperor's
return is doomed to failure without reinforcements from France to c cnta'in
the 'Viet 'rinh troops within present limits. At the present time, it
arrears quite unlikely that such aid rill be forthcoming in the amounts
necessary to improve the situation.
Terrorist su essi.on costs mount- Although British anti-terrorist
operations have been increasingly successful, the cost of the campaign
has become almost prohibitive. Security measures now cost the Federation
eft estimated, tYS.d`15O,,OOO daily. Thus, while the terrorists have not been
able to disrupt the country's ec o:oay by lowering tin and rubber production
substantially, they have scored a victory from a different but equally
effective angle.,
Lest week the UUK announced a gift, with no strings attached, of
b5,00O,000 as aid in financing '"alaya' a internal security, over and above
present military aid.. 'Thile not inconsiderable, this sum was not received
with unanimous approval by the Federation's Legislative Councillors?
Dato Onn, influential Prime Minister of Johore, characterized it as
'B5
"A"
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Brut probably inescapable burden.
!RAY (continued) "niggardly" and "..,a flea bite in comparison with what the !'slay States
and '9alaya as a whole 'had done for Britain." He urged the High Commissioner
to make further representations to Britain to "honor a debt" which, he
Several other
said, had accumulated since the British entry into 716147a,,
members expressed disappointment that the gift was not larger,
Unless conditions improve substantially, the Federation will undoubted-
ly have to take advantage of Britain's offer, advanced along with the gift,
to reeccamine the Federation's needs before the end of this year. C oats
are mounting and, according to Langdon, hope of early extermination of
f-1,tt terrorists is vanishing. To a hard-pressed Britain, aprree iat1% a of
Tulaya' s dollar-eta ning capacity, further aid to r,4alaya will be a sev ure
BUT to
Government shaken will not ease Karen problem-The recent resigna-
tion '6f Socialist an Yellow Armed Band Peoples' volunteer Organization
(p-yr) members from the Burmese Cabinet has left Prime !4inister Thakin Nu
with a skeleton ca inet composed of independent politicians with little
or no fereonal following. Although the widespread armed opposition to
the government was mrobably the leading factor behind the cabinet resig-
nations, it in possible that there were other important though less
apnaret reasons. In view of the fact that the resigning 'iinisters pledged
their aurn-iort to any Government committed to the restoration of peace,
stability of ;.?a Tinton and the holding of free elections, their purpose
may have been to allow Thakin Hu, supported by a cabinet whose members
appear to have no personal political. connections, to attempt to reach an
agreement with the insurgent Karens and '"hits Armed Band PVO, In line
with this reasoning, Na has accepted the proffered good offices of the
Commonwealth. In response, the British, Indian and Pakistan ambassadors
are-sending a Joint message proposing peace talks to the Karens. On the
other hand, it has been reported that Supreme Court Justice E ?.iaung and
Supreme Commander No 'Min, both believed to be acceptable to the trhite
Armed Band PV(I, will relieve Nu of the Home and Defense portfolios
respectively. This move may be a parallel attempt to placate the in-
surgent PVOs.
The Karen* will probably accept the Commonwealth offer, but will
enter into negotiations with grave reservations, and will insist upon
strong guarantees - possibly from the Commonwealth itself - which are
unlikely to be forthcoming. The PVO is apparently undecided as to whether
to enter a coalition under Na, or attempt to seize complete control of
the government. !Rost of them will not condone negotiations with the PCarens,
or cooperation with Thakin Nu unless they are in a position to dominate
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the coalition. Should some T'Vn leaders join a coalition, it is quite
likely that the TV(} will split. If the FVO attempts to unseat the
government by force, the result will be violence in Rangoon and the
outcome ie.unpredictable. There are indications that the, PVC is
already in a strong position to stage such an uprising although it
would be opposed by those forces still loyal, to the government, All
things considered, the temporary easing of the tension in Rangoon as
a result of the. cabinet resignations does not presage any improvement
in the situation in Burma in the near future.
Its," OI1TSIA
Control of Jogjakarta key issue at Batavia mesettrt C onditional
ac, ep c e the Netherlands of an v to on to at end the TITCF I
sponsored meetings in Batavia has been followed by a Republican condition-
al acceptance, The Dutch have indicated that their acceptance must not
prejudice Netherlands responsibility for "freed and order in Indonesia,"
.and the Republiears have made it equally clear that initial. discussions
must be .limited to the practical details of restoration of the Republican
Government to the capital city of Jogjakarta, Basically, 'both aides are
particularly concerned with the role of the Republican Army in maintaining
law and order in the Republican capital. Dutch political leaders have
consistently opposed the use by the Republicans of their "private" army,
as opr osed to a "federal" am r, in any area in Trtdonesia? The Republicans
insist that restoration and maintenance of order in Jogjakarta depends
entirely upon the presence of combined Republican military and civil
police there.
The ITS Representative to the I i Committee for Thdonesia, recctwnends:
(i) Dutch forces be withdrawn from Jogjakarta and its environs and (2)
that a sufficiently large Republican force be nermnitted to replace these
Dutch military unite, Ile feels that only thus will the Republicans be. in
a position to reestablish. the popular support necessary for successful..
compliance with a cease-fire order.
g'fTTLTPT'? S
Nacionali tas hold Senate balance of )owar-Although President ".uirinoe s
poll al nos t on appears to a ov ng, he is threatened by a force
which is paradoxically one of the most important sources of his strength:
Quirino is completely dependent upon the Nacional..ista-' uirinista alliance
in the Senate., Aware of their "balance of parr" strength, the Nacionaliestas
have evidently pressed for every possible advantage, They have been assigned
a majority on the last two Senatorial investigating committees and in
accordance with a Senate reorganization plan. they may hold chairmanships
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of the most important Senate standing committees. The Nacionalistas are
also pressing for reexamination of their protests against the election
of certain Liberal Senators in _November 1947. Should Ouirino win over
a sufficient number of Avelino followers or should a compromise be
effected between the Liberal factions, fluirino could end his dependence
uron the 1'Tacionalistae. However, since neither of these r- ossibilities
ie imminent, the ' acionalietas may be expected to maintain their ini-
nortant bargaining'rosition for the remainder of the current Con-
gressional session,
PHTLTPP'TNBS (continued)
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SECTION III. !& DIGEST
Dissident activity in South China
The twin problems of banditry and tribal brigandage, which tradition-
ally plague both local and national officials in the outlying regions of
China, have grown more acute, particularly in the south and southwest.
ethos the collapse of the Rationalist military effort north of the Yangtze
Rivera The ominous presence of Communist regulars just north of the river,,
cr3.the numerous small bands of Communist irregulars south of the ri- r
help point up the necessity of Nationalist pacification or liquidati.n of
all anti-government movements in the rear if further resistance to the
Communists is to be thought of
Recent dissident manifestations in Hunan, Yunnan, Xwanrtunr, and on
the Indochinese border lends urgency to such pacification efforts. A
rebellion by Miao tribesmen, which began in me-tern Hunan, has spread to
the center of the province and become a matter of "serious concern' to
both PAT Chung-hsi, Central China commander whose rear is thereby threatened
and CIIE17G Chien, the provincial governor whose fief is being disturbed.
The traditional tribal resentment against "oppresive" outside interference--
i,e., by Chinese authorities-was ignited When provincial leader'sQattempting
to effect long--standing proscriptions against the growing of opium, executed
several officials and seized the local peoples' weapons., Although no
Communist inspiration or direction has been thus far discernible, the up-
rising has reportedly fanned out of west Punan to the environs of Changsha,,
the provincial capital, and poses a serious threat to Nationalist control
in the area,,
In Yunnan, an estimated third of the province's 13$ Helen are said to
be bandit-controlled and bandits are particularly active southeast and east
of Fuming as well as along the Indochinese frontier. Bandit suppression
has been placed above opium suppression and a joint Kweiohow-Yunnan Bandit
Extermination Headquarters has been established. To date, this organiza-
tion's main contribution to the campaign has been a series of meaningless
general instructions to local authorities,,
In Kvangtung and on Hainan, the forces of "organized lawlessness for
profit",non--ideological bandits, pirates end smugglers of long standing--
in conjunction with Communist bands--may actually outnumber the forces of
the provincial government. The government consequently., exercises praoti'
sally no control over large sections of rural Kwangtung and interior Hainan,
Recently several revolts among the provincial troops have further emphasized
the weakness of the Kwangtung pacification effort.
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.81-
On both the Kwangtung and Yuzman frontiers with Indochina, the French
have charged that Chinese insurgents--although not necessarily Communists-
have joined with Viet Minh forces in attacks on French garrisonso
South China dissidents fall, roughly,, into three categories: (1) groups
either made up of or led by actual Communists; (2) local bandits and
dissidents, having no particular political coloring (this is the largest
group); and (3) opportunist bands of local bullies, fugitives, army
deserters and the like. Each such group operates, for the most part, in
bands of 300-500; liaison between the bands is often tenuous, and, iii it
exists at all, is probably exercised through a hard core of Communists,
1'.e :use of the very nature of their operations and because the shad:srg
between the forces of law and the lawless is extremely fine,, sometime
fictional and susceptible to quick mutation, the total number of dissidents
in the whole of South China is difficult to determine. It may be as high
as 150-175,000. The true strength of these forces is more accurately
reflected in the number of rifles they possess and this runs as low as one
rifle per ten men. Despite Communist financial and propaganda blandish-m
mentso these forces are not presently nor will they necessarily become
Cornnunist-oriented, yet they serve the Communist purpose by denying the
countryside to the Nationalist tax-collectors and conscription officials,
causing the provincial government to lose face and keeping the area in
continual turmoil,
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