OFFICE OF REPORTS AND ESTIMATES, CIA FAR EAST/PACIFIC BRANCH

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000400060001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: November 16, 2016
• Document Release Date: September 28, 1998
• Sequence Number: 1
• Publication Date: April 26, 1948
• Content Type: REPORT

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HANGS Val CLASS fl
LASS. CHANGED TO: T3 S c FAR EAST/PACIFIC BRANCH
NEXTREVIEW DATE:
RUTH; HR 70-
REVIEWER: 372044
INTELLIGE E HIGHLIGHTS - WEER OF 20 APRIL - 26 APRIL 1948
GENERAL
'Deapite recent statements by Chinese one overnment officials
for acknowledgment that China suffered most in, the war and the granting to
China of 50% of total reparations. The resolution also asks for the cession
to China of the Ryuku Islands. The resolution further demands that Japan
be controlled for 50 years by a Four-Power control organ. and that Allied
troops continue in occupation of all principal Japanese cities.
indicating support for the US liberalized rehabilitation program for Japan,
the Chinese National. Assembly, at Nanking on 21 April, passed a 14-point
resolution on the Japanese peace treaty which reflects continued popular
fear of a resurgent Japan. The resolution, providing for the retention
of the veto by the Rig Four in a conference to be held in China, calls for
the abolition of the emperor system, the destruotion of the Japanese
military industry including metal and chemical industries, limitation of
Japanese industrial capacity to the 1928-30 level, restriction of Japanese-
imports, prohibition of a Japanese army, navy, air force, or secret police,
limitation of Japanese territory to four home islands and a purge of text-
books and imperial institutions. At the same time the resolution calls
'Constitutionally the National Assembly does not have the power to
determine national policies, nor do its resolutions bind the Government.
However, as an expression of the majority view of some 3,000 Assemblymen,
chosen by direct election, this resolution clearly indicates that, official
assurances to the contrary, sentiment favoring a "hard" peace with Japan
is deep-seated among politioally-artioulate Chinese.
Southeast Asia League currently inactive
Since-the amese.coup e of November 1947, activities of the
Southeast Asia League have apparently been suspended because of the
Aphaiwong Governmont's disinterest and the marked antipathy of the
succeeding Phibul Government towards the organization and its leaders.
(The League is a loosely-organized Southeast Asian federation formed in
Bangkok in September 1947 by "representatives" of Siam, Vietnam, Laos,
Cambodia, Indonesia, Malaya and Burma) Premier Phibul opposes any such
movement on the grounds that it could be a vehicle for Communist or
Chinese penetration. With the recall to Indochina in December 1947 of the
League's 'Vice-President, Tran Van?Giau (Bangkok representative of the
Viet Minh), the Communist flavor of the League was markedly reduced, but
it still retains.a left-wing label. Because of the extremely unsettled
.conditions in Burman it is not anticipated that League headquarters will
be moved from Bangkok to Rangoon, as was rumored, nor will its activities
in Bangkok be increased in the near future. It has been further reported
that the recently-arrived Soviet diplomatic representatives in Bangkok C(%
-C% 14
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GE?ERAL (Continued)
have not as yet approached the remaining; key mernbersof the League
Nevertheless, it is likely that effective Soviet contact w1 th the League
will be established if a projected reorganization takes place and
conditions favorable to a transfer to Rangoon develop.
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25X6A
First loan against OJEIRF reported. The US Export Import Bank has
announce that it will join th a private banking syndicate in making a
X60,000,000 loan to finance shipments of US cotton to Japan. The Export-
Import Bank will furnish x`29,000,000 of the credit and the remaining
'31,000,000 will be furnished by the private banking syndicate. The bank's
statement said that Japanese mills are to make textiles from the cotton.
forty percent of the cotton cloth will be consumed in Japan and the rest
will be sold in Japan's prewar export markets.
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The loan will be the first to be made against the "occupied Japan
export-import revolving
fund" (OJ g"r iT ), set up last August to finance
purchase of cotton in Japan. Originally, the revolvir: fund consisted
of ' 137,000,000 worth of assets of precious metals, owned by the .'apanese
Government and not definitely subject to restitution. However, the
I port-T*npo rt Bank has announced that the fund now consists of I 04, 000, 000
in gold, ;`i8,000,000 in silver and ?'373,000 in US cash, all of which was
turned over to the fund by occupation authorities.
Possible ratification of "'Cons ti.tutton" for Forth 'Korea. After
repeated postponement of action onn the nraft i rovi lion.+ Cor?stituti on,"
it has now been announced that on 28 April the Forth Forea People's
Council will meet in extraordirar. session to discuss further this . cd.raft
constitution of the "Be7:ocratic People's :?ep' hlic of Korea."
she timing is such that if ratification takes place on the 28th, as
is now expected, there will be the fullest political impact to offset the
siF,rificanoe of the elections in South Korea. The current Soviet-sponsored
Forth-South "unity" conference offers an opportunit;; for presorting for
ratification a consti tution incorcorating the "ideas and recommendations
of de^iocratic elements in South Korea." Tn addition, ratification of the
constitution in its present fore will ipso facto establish a provisional
;cvernnent of "all" Korea with a tc:tforar, capitol in i' on ^.r.:~.
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CHINA
Lla.la.tt~r~ ,
There were further indications last week t hat the Ccrmanists are about
to launch their spring offensive in Lianchuria., They were busily completing
repairs on recently captured rail lines, particularly in the Itsinlitun-Tahushan
and the Anshan areas, Although the rnin body of Lin Piac's troops were in
the region between Tiehling and Changchun and capable of striking in either
direction, new concentrations of Comanuiists were reported near Ihsien just
north of Chinchou and along the Great gall mountain passes;. It is possible
that these latter forces may become the initial striking force in the new of-
feneive, attacking the Nationalist salient along the Peiping-iukden railroad
from Tientsin to Chinahou. Recent Ccx:naaanist actions in the Tatung-.Kalgan
sector forced the Nationalists to redeploy the forces i+ ich would have been
used to counter such a blow. These units are still. vainly groping for the
main body of the attacking Com:naniats. Irregular Nationalist forces penetrated
into Communist territory south of Tientsin, captured several Comrnanist bases.,
but have apparently been forced to withdraw,
The Nationalists, in line with a newly enunciated policy of evacuating
points "having little strategic irq)ortance", announced that Tolun, in Chahar,
and Yenan, the ox-Corn-nunist capitol0had been abandoned. The loss of Yenan.,
occupied by the Nationalists in Larch 1947 with no little fanfare, represents
(as did its capture) mostly a psychological change. It is, however, at least
symptomatic of a general worsening of the Nationalist picture in Shensi, where
late Con a mist moves have resulted in the interdiction of the important Sian-
Ianchou highcaay, and a threat to Sian itself. Corannrniet forces in Central
China continue to move in a general northwesterly direction; units are presently
active in the Han River basin of the Hupeh-Shensi border region where they
have taken Yunhsien and Hsunyang, near Ankvng,
Political
The vice-presidential election now in process in the National Assembly
has widened the split within the Kuomintang. After the first two ballots in
which Li Tsang-jen carried a substantial lead over Sun Po with Cheng Chien
trailing in third place, all three candidates withdrew their names from the
allot, General Li charged that, despite the Kuomintang announcement that it
would be an open election, the Party had given its support to Sun Fo, Sun's
supporters attempted to discredit Li by charging that he planned a coup dretat
if elected. An attempt is now being made to persuade the candidates to run
again, Li Tsang-jen, considered?a "reform" candidate, has drawn much of his
support from those factions dissatisfied with the old guard. His election in
the face of Xuomintang opposition would indicate a show of independence on
the part of the Assembly delegates and a defeat for the Generalisskio, who
appears to be backing Sun Fo behind the scenes, If Li should be defeated he
may be expected to continue his drive for reform while some reports intinte
that he might even attempt a military coup although at present the latter ap-
pears unlikely.
Apparent acceptance by Chiang Kai-shok of a program of land redistribution
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tE;L~-Lect3 the uriureWEB of the Mi.nese I'Satiorl" Governrent that positive mea-
cures of agrarian re. orfa can no inter use postponed without' .Loss of the al-
~ wrists. The prograr endorsed
le ir~nce of the peasant population to the Coat
at a recent meeting of central China itlitary and civ~ 1. author S.t ec,, authorizes
a redistribiition of all land in excess of five r- a (e4lig:itly less than one
ere) per person in area recovere u ire 6 e GO .an!s-S or in danger of C
r ist infiltration. The conference also recorai vended that a eiLlar pro(xam
because of Ciiiargp s fear of
later extended trsrotiilnout China Ho ?.ver, '=osin 1andoier support, it is likely that, even in the areas under current
ii scission. his endorsement of the plan will turn out to be rwrely a political
:.kjnr,uver and that actual reform will not be effectiveo to
The Lt:3 t continues to withhold clearance for the US Consul UenerallSoviet-
^.? ntro ~.ecl Uaa ren. Since the Soviet has reused entry to Dairen to any non-
oviet ships, US consular personnel and co riers are dependent on Soviet trans-
tuaiting at
til 1
i
,
s s
portation, The last courier to Dairen two months ago
Vladivostok for return transportation.
Eastern Mongols in government-held 12anchuria have chartered a plane, to
flv from Mutaden to ranking early next week carrying eleven Mongol representa-
tives. The group will meet in Nanking other Mongol groups from Jehol, Chahar,
Ni ghsia, Sikang and Sinkiang, and will petition the government to implement
autonomous administration for 1ongolia. : ;astern,Mongols desire to have von-
go] i.an areas now embraced by Liaopoi, iieilungkiar , Ntmkiang and Heingan
orJinces with halen status, excluded from provincial administration and or-
nized into Mongol, ad i.nistered W n& (provinces) divided into hoshun (hssien)
fcnomic
11 ivate Ilojdin , a -bx?oaaw Finance Minister C .:i.Yui told the National
assembly that the Government is still seeking US and UK intervention in dism-
losing private Chinese deposits in the United States and Great Britain,
to memo, Kong. The -National Government is seriously
yin
?l1
tti
'
g
-H
le
1eJ c
,_ concerned over the large scale migration of Shanghai cotton mills. to Hong Kong,
,rich is affecting employment and depriving the Jovernment of irzport/export
revenues o chief reasons for leaving china are: (1) import/export difficulties;
(2) foareign exchange controls, (3) unstable econo y and (4) military uncer-
tainties.
UUranium. The Mineral Survey Board of the fational Government reports
that Bran um has been discovered in Kvangsi.
Currency Prices. Prices rose slorly during the week in the Yangtze Valley,
but sharply in the Peiping area as a result of a temporary accumulation of idle
funds in the Peiping area, The US dollar bought ON ,'700,000 on the Shanghai
-blackmarket while it reached CN *860a000 to 1 at Peiping,
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The Shanghai .arket:
US 1;xchan e Sellinj Rate)
?Wholesale Price of Rice
Official open" B)ackmarkat
Des 172 lb picul
This week (23 Apr 48)
CPS 0 28.9000
~
700,000 (20 Apr) CP1 0,95Q,000
Ne?k ago (16 Apr 48)
1
328,000
640,000 32500,000
I tanth ago (23 tar 48)
258, 500
5000000 . 3,800,000
Year ago (23 Apr 47)
122000
20,000 180,000
? The Legislative Yuan has approved the issue of an unfixed number of short-
term treasury notes for the purpose of absorbing outstanding currency, Past
efforts of this nature have not succeeded,
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letter reveals ob ectives of military groups L revealing letter
addrei sed to Premier Phibul (also ornT C-In-C) anpeared in the Pangkok
caress last weeks It was signed by Arzr Deputy C-in-C Phin and Army
Assistant C-in-C Kach. the most aggressive and ambitious of the n'ovember
coup group. The letter stated that since Phibul is now needed by the
nation to solve national problems (the high cost of living, influx of
aliens, etc ),the military group suggests an agreement with him on the
following points: (1) that he continue to give advice to the military
groups; (2) that the position of C-in-C be left vacant during the time
he is borrowed by the nation, that th? administration of the Army be
temporarily entrusted to the Deputy and :assistant C-in-C who should c on-
tinue to hold their present positions and that all Arn transfers and
arpointments be approved by Phibul; and (3) that the military group and
the Arur should give support to politics and pledge their support to
Premier rhibuly The signers also requast that they or their renresenta?
tines be permitted to "sit btaide you (Phibul) at every meeting of the
houses of Parliament." The letter concludes with the earnest hope that
Phibul would grant: these requests.
This letter is believed to be an open attenpt by these Array leaders
to bargain with P ibul for more authority and prestige in return for their
continued supports
f Dad Demofx3trations aray climax labor _disturbance. Singapore harbor
has been paralyzed r strikes called by the Singapore Federation of Trade
Unions (SFTU) and the Singapore Harbor Laborers' Union (SHLTJ)s Originally,
the strike was a combination of a demand for higher wages and a protest
against police rains on Union headquarters. Subsequently, however, the
strikers presented a list of 31 demands and indicated that the strike would
continue until the demands were met, Both the SFTu,and the Sti!i are Corn
monist-dominated and there are very strong indications that the strike was
engineered by union leaders without ccrosultinp the workers,
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MALAYA (continued)
These activities may be a prelude to demonstrations by the MJlalayan-
Communists on May Day. The SFTU has issued a manifesto, dated 12 April,
calling on laborers "to unite more closely with Communist circles in
Malaya, to strengthen the labor front, and to be prepared to face the
British imperialistic anti-Communist campaign." Several slogans, to be
shouted during May Day activities, were written into the manifesto, one
of which was "support the good leadership of the Malayan Communist Party."
Scattered incidents of violence may occur during the strike and the May Day
demonstrations but it is believed that UK security forces are capable of
controlling the situation.
25X6A
PHILIPPINES
Philippine veterans may oppose Laurel as President. The most significant
opposition as to election oose P. Laurel as President in 1949 appears
to have developed under the leadership of Brigadier General Maoario Peralta,
Chairman of the Philippine Veterans Board and National Commander of the
Philippine Veterans Legion. Peralta requested that records and information
be made available by the US Army for use in a campaign against Laurel and
stated that such action was equally vital to the United States and to th,a US
Army. General Peralta has threatened to resign and fight the admi.reistration
"to the last ditch" if President Quirino appoints Laurel to a Cabinet post as
currently rumoredo
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rl~e
3 II TPPT??? S (continued)
Peraltae who was an effective leader of one of the largest guerrilla
groups in the Philippines during the Japanese occupation, has erilerged as
the chief spokesman for almost half a million veterans since his recent
unanimous election as National Commander of the Philippine Veterans Legion,
The veterans' leader publicly opposed the late President Ttoxas' 2 January
amnesty proclamation for political and economic collaborators and claimed
credit for the Congressional delay in its' ratification. Cenora.l Peralta
has also taken an active part in suxrnorting pending legislation designed
to secure greater participation of Filipino veterans in armed forces pro-
motion lists,
It is likely that under Peralta'a leadership the veterans organization
will continue to oprose Laurel, This ornosition may have been inspired
largely by the fear that passage of ? ,~ le illation extending CI benefits
to Philippine veterans would be jeopardized if Laurel assumes public office,
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