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

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000400060009-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: November 16, 2016
• Document Release Date: September 28, 1998
• Sequence Number: 9
• Publication Date: June 23, 1948
• Content Type: REPORT

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g4loz, nr REPORTS AND ESTII2ATB?: CIA
FAR EAST/PACIFIC .1RANIA.1
PESLLIGENCS HIGHLIGHTS NO.
7J;fB1K OP 15 JUNE ? 21 JUNE 190
SECTION I. WIMARY OF KR EAST TRENDS AND DEVELOPMENTS
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At the United Nations Economic Commission for Asia am
the For East 1.,ee6ing in India, 1 ? 18 June, both the US by its stand on
financial, aid and the USSR by its debating techniques which greatly slowed
progress at the conference, appear to have lost popularity with delegates
from Far Eastern countirnes, .(page 5)6 Soviet economic activities in South?
east Asia continue, (pagc 4).
T,legotiations betricen Seoul and Pyongyang to effect a settlement of the
-;loctric power dispute have reached a complete stalemates(page 6).
Increasinr4 military activity over a wido area in China vas highlights:I
^ky the Communist capture of the importhrt city of Kaiforg (page 7). Faction-
-Aim-a in the legislative Yuan is further indication of the rifts in the ITT
rnd while such rifts may be indicative of the appearance of dwocratic
%cadencies on the Chinese scene, they aro hindering the fort ion of any
,IniAed or effective ir?overmilent policy (pea) 7). Chinese students plan to
oxpand anti?D6 activities (page 7).
In succeeding sectIons of tnis Look15,, -6he loilowing vorgIne
notations are used:
:(1) An asterisk -- to indicate that all or part of on
:Item is based solely upon infamxtion from StatO s
S/5 distributionq series.
1111:111 "Pin/
or ,IC" -- importance, in BikEts opinion,
of
with " iThe mos-1; ithpc&tant ones. 41N
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SUMMARY (continued)
Prolonged disturbances in Malaya, which now can be considered likely,
would deprive the UK of a major dollar earning are% the US of a source of
vital new materials and would seriously jeopardize the success of the
European RecoVery Program (page 9).
Success of the new provisional regime in Indochina may depend oft the
ability of High GoMmissioner Bollaert, at present enroute to Paris, to
convince the PrImwhAssembly of the immediate necessity of app-roving and
ircamonting the Franco-Vietnamese treaty, (page 9).
Amnesty for dissident agrarian organizations may result in au increasingly
aationalisticArend (page 10).
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GSNIZRAL (continued)
US.221197, in the Far East criti...similq_Aile
The charge that UO policy in the Far Tast is vacillating mid temporary "BP
was made by the Indian delegate to %ECM, Singh.in an unofficial convex'-.
satiou.adth US political Advieor, Jacobs. Singh said that the US seemed to
be directing all its attention towards Europe and neglecting the Far East*
He intimated that perhaps the US had decided that it cannot effectively
oppose the USSR on all fronts and as a result planned to abandon Asia,
Because of the irresolution of US policy, Sin& said, Far Eastern nation*
are faced with the dilemma of either aiding with the US and running the
risk of being let dem or of seeking to slide, as gracefully as possible,
into the Soviet orbit* Shighla statements, are probably Indicative of the
views held by sOM3 informed and influential persons in Far Eastern countries
and coneequently, exert some influence on the attitudes of these countries
towards the US and its policies*
USSR economic activities in Southeast Asia continue
USSR economic activities in Southeast Asia (SEA) appear to be gaining "BP
mementua4 Further Soviet offere to buy unlimited quantities of tin and as
much as 3,000 tons monthly of :rubber in Siam together with a newly expressed
Czechoslovakian interest in rubber and other commodities indicate Soviet
eagerness to compete in the SEA marked, In addition, USSR shipping facilities
are reported to be readily available for trade with Sim. Trade representa-
tives of the USSR and Czechoslovakia appanantly are agreeable to payments in
US dollars, UK pounds or by barter. The USSR has offered to export to Siam,
among other goods, newsprint, chemicals, coal, and oil. The Soviets are
reported to be enlarging their area of economic activity by recruiting Chinese
agents for the penetration of Siam and Halaya and through Siamese and Chinese
25X6A labor =ions in Bangkok.
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CONFISENTIAL
GEJEPAL (continued)
---...--- ?
Thirc Session of UN-ICA FE fails to 42T212p__EnceEted program for the economig
r3bianVaraira-W-Parggif7--
The United Nations Economic Commission for Asia and the Far East meeting
in Ootacamund, India, June 1 - 18th, concluded its third session with little
tangible evidence that progress had been made towards the economic develop-
ment and reconstruction of the Far East. Like the previous conference, held
in Beguio, P.I. in November 1947, leaders of the Far Eastern delegations
maintained that no improvement in their economic position could be achieved
without assistance from western nations in the tom of capita goods. The
US ambassador Henry F. Grady, however, dispelled any impression that the US
intended to bolster Asian recovery with outright monetary gifts. Both DS,
by its stand on financial aid, and the USSR, by its debating techniques which
greatly slowed progress, appear to have lost popularity with delegates from
Far Eastern countries. The earlier sessions of the conference were marked
by a political controversy centering around the decision on the application
of the Indonesian Republic fop associate membership. Unable to agree the
conferees accepted a resolution by the Philippine delegationeshich postponed
action on the issue until the fourth session, A Soviet delegate asked for
consideration of Vietnam membership, but an issue was avoided by a ruling of
the Executive Secretary that the Vietnamese had not applied for membership.
The session did, however, provide an opportunity for dnerxchange of
views by Southeast Asian countries concerning the possibilities for future
cooperation, and the machinery to effect implementation of future decisions
was agreed upon. Temporary headquarters of ECAFE will remain at Shanghai,
and Australia will be the scene of the fourth session which will be held in
November 1948.
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C MULL.
KOREA
e,otiations between Seoul and Pyonvang to effect a settlement or "C"
the electric, paTir_WECErhav?e reached a npie?t-e?sTargi.744:? The Soviet
i;i7PTy of IS June to Gen.TITZEgIn South Korea by Gen. Ujr. S. P. .erkulov,
Commanding General of the Soviet Forces in North Korea re-stating the
Soviet refusal to accept responsibility for the cut-off of the flow of
electric power from North to South Korea was expected. The US is now
faced with two alternatives: (1) the US can deal directly with the Ilerth
Yorean Peoples Committee as the USSR insists, however, this would be
tantamount to US recognition of the sovereignty of that body in North
Korea, or (2) the US can make representations on a Washinf_tton rose=
level although this new approach offers little hope for a satisfactory
settlement. However, such representations might be considered by the
Koreans as evidence of the good faith on the part of the US to settle
the dispute thus having a salutary effect.
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cougiggririAL.
CHINA.
The Sheetengelionan border area remained the focal point Of the Chinese "A"
f? ,ieiat'utr-F%ie--e7t-Eie-iairi-ea-oe."F71%iF'f,F a+in?s cam rpressnee,-TE7-
-------e-
Communists continued their southward drive along the Tien sinePukou Railway,
cut the Lunehai Railrey between Kaifeng and Heuchou, end, joining with units
from the Central China region, launched the latest in a series of attacks.
upon the ChenghsieneKaifeng area. The quick recognition given the Communist
capture of Kaifeng by the Nationalist press may reflect Nationalist conviction
that the Communists will simply loot the city and rithdra* without defending
it in the face of Nationalist countereattacks. Tn the north the Communists,
after withdrawing from Chengteh, have attacked the Peiping-Mukden Railway in
,ha vicinity of the Jail= coal fields near Tangehan. Nationalist reinforce-
vents subsequently reduced that threat, but the Communists shifted their
attacks eastward to the Leanhsien area.
Although the Nationalists have failed to seize the military initiative
In this period of relative Communist quiescence, Nationaliet leaders are
reportedly confident of their ability to strengthen and ho4d presently
occupied areas and are even thinking of possible countereoffensives when and
if the Communists move, leaving their base areae vulnerable. .
Factionalism in the Legislative Yuan has resulted in Severe attacks on "AP
Wong tteli:MriTero-Tr-.aue-onolitical fellewing:of his own, may *
not last more than a few months as Premier. T. V. Soong estimates that even
the Generalissimo can not control more than 25% of the legislature. Sun Poe
President of the Legislative nen, deplored the fact that the many divisions
prevented the emergence of any capable legislative leadership. One legislator,
most outspoken in his criticism of the Governmeat, said that some members of
the Yuan may form a third party if necessary. This factioealism is further
Indication of the rifts in the Kuomintang. While it may be evidence of the
appearance of democratic tendencies an the Chinese scene, this conflict is
hindering the formulation of any-mnified or effective government policies.
Li Tsungelense program for reform as explained hyKaaChiehehou his
political advisor, anticipates the removal of Chiang Kaieshek when ehiangNs
support from the ihampoa Clique dieeolves. According to Keno after the
introduction of many new feces into the Government and the formation of third
party fraa elements in the Legislative !ban, Li hopes to effect a settlement
with the Communists that will give the latter a minor position in the Govern-
ment. At present, however, Li appears to be making little progress with his
program and it is doubtful if he ea* make the accommodation with the Communist's
which he is reported to desire. -
AmtieAmerioan movementee The Chiaotung University students, who have "RI
been175.a.ar7=gadairEseged US policy of resurrecting a militant Japan,
have seemingly maneuvered the Shanghai mayor into a dilemma. They have refused
to answer his eight eqeestions designed to uncover the organization behind the
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recent student unrest. Mayor Wu had stated that if satisfactory answers
were not returned, he would summon the students for questioning before a
tribunal of public opirZon bodies and he has now decided t invite delegates
from a large number of public organs to form such a tri 1, Houaver, the
5hanghai Consulate feels the Mayor is deeply concerned ove the students
plans to invest the movement with the character of a 1causj eelebren and to
prove the "pure motive" behind their actions, in which des.gns they will be
assisted by solidified anti-US aentimsnt in non-student c 'else and a general
tendency to condone these student. activities?
Reaction to US policy in Japan came from still anothe
Kong lex:linesmen recently-established an association to op
Japanese industrial recovery,
Heeopenin inland waters to foreiL. hiin.The M
cations announce pre arrangements have
US vessels carrying aid supplies to China to sail up the Y
conditions "which will not infringe upon China's inland na
(The Yangtze has been closed to foreign shipping since V-J
privileges are granted only for a temporary period of 6 m
posts of call are limited to Nanking and Hankow, Accordin
agreement, only US merchantmen coming direct from foreign
allowed entry, These Ships on the return voyage will be al
articles destined for foreign countries without making furt
ports enroute. Britain will probably-renew efforts to obta
source rhen Hong
053 US ead to
stry of Commmni- "Cu
en made to permit
gtze aver, under
gation rights,"
ay.) Such special
the or 1 year, and
to the reported
ts will be
awed to load export
ler stops at Chinese
n the earns privilege,
p_L_rrenaML____?iceso Despite renewed Government concern o er the economic 'lee
situatio55TIEF-61jakmarket rate on US Dollars rose to a new high during the:
week?CN $2,250,000 to US $10 F011oeing this slump in the elm of the CM $,
commodities reached new highs with rice selling at over CN 10 million a pica,
as compared with the pre-war price of only CM $10, Soaring prices and short
supplies caused serious rice riots in Chungking and Ningpo, Each succeeding
financial crisis is more severe, while control measures seet less effective.
There are reports of increasing refusals to accept CN cFre ay as a monetary
medium, although each a trend is not yet widespread,
The Shanghai Market: US $ Exehange (Selling Hate) WhoL sale Price of Hi
This week (18 Jen 48)
Week ago (11 Jun 48)
Month ago (18 May 48)
Year ago (18 Jun 47)
CM $4802000
1480,000
1480, 000
12,000
CM $221002000
1,675,000
1,120,000
34,000
CM $10,1000000
8,800,000
5,35020oo
h000000
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COMEtpi,
11,1 .;.K
7.?
? ?.- 7t, r) ?7 - ;
- ,
"o't
1.nee
i.icii
plantel-s cc7i.itraeto,
1:Autheritios in 7elaya, incindinFr the Governor
cnald, recently asslrted that they had evidence of ComOunist plane for
political offensive in the-Far includinF disturbmiCos in !..:iaIaya,
tho ussn is ong.g6d in extoarsive purchasou in7!;alaya of ribber
etockpiling purposes, it iv liTely that the .a6viots have played a pIrt
An deoieion to efroct tqlbsntial curtailment of UK and IS influence
by creating co.n6ltirlos which would -necessitate' the .expansive
opint of the limito4 military strmpth, J:twould appsar that the
10oal Chinele Copuntat elements are, aulp.e thAt Ur'; Nwet also
ar.fasd fnction, who have indleai:.cd their
ic.t.i;r1:7.:isn'to assort cool ATI ,Alaya,?if UK authority Shows tains of
Pvcion 6..i.st,nvbes in 77ala:-..m whiah nom ean be considered . ?
donrivo ';'Y of a. major dellar axmminp area, the US of a .
L;cyce o:7 vital ',e,11 1-ateflais, and zruld- seriously jeopardize tho success
f.)c tho 'qnoe1or7 'Progran.
l'if.,D07,1111\7A
Thiolo.ototion of r,rreement .in ;:re;Ich Tndoehina n entts on orifi.oation
')C :e17;Hp.--pr-Tfei-..- ' 7 5);:rr-7-a -r;:ii;;Ikli:cWE'fr7rt- - o-f-fi'iiiiisTiTho-licF:,r:i:f,----ii----aa? l''x's-e.r-A-i-ti -
Ind chi..a is essential If agreemants in the sensitive diplomatic, rilitary,
8nd stolomie fields are to b,,1 conciude4 with the French-a
Isored provisional
(3,-,,T:1,r,t1 goverment of'Vitnam. The status of French Indoc.ina? which wae
partially clarified in the 5 no nEn.eauent negotiated in tadochina by
7re.lch 7111 CcawAsaioaw! Pallacrt?, mo ths subject of recent 3.-craricalkir
CoLi.e-r1ot, ths 177-aucll 'rinicier for 0,Yersoao France. Cotc-Fioret indi_
nat-.4 that the runrivmental paniti.on of tho French Government Galls for tha
cmaeto freeeell 0.;''Tieiam ithin the 'irench Union and the unifieetion, by
a fll'ec Pcoulta" VOL'; oZ tIto tbreo states callposlrig Vietnam (Tonkin, Annam,
nd Coohinehin), His fit point wav zinalificd, honorer, by the statemnnt
the1. Athin the French Frien i.ho wur,t be "unity" of diplaiLacy and of the
:Irmy. Dearit,!:, hir; insio:-,,,:.,:xg: tIwt unification lc to bc doCided by the
Viotmmoss thenioclvts, ,Th3te-Zise't. fi.aantairati that the sinai,aro of the
5 Jona trczst7 (..M rxt .1T,-,- -Fro,lch .Y.--coaltion of unficatl_on, inasmuch an
by the ,,:,mns;h ,A,,.=:obly!amikofIrea, iv, ivyin ,I,EAcElitl 0,f arg:hinohina
@A-al a P.-.7.E-P.ch colony) rains xtre-,:arta.t.7 rituktea-slisey. oues;ke-1-36 t.-Lt. Lae
*1;&-eilroYliel6A1 ithiaiiii& :t1A-iii5076fd' gbide614661Y66'6110 ?g -1;calarY''
np"
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77.7DTTIMA (contined)
pres-ant en route to to nor,.-,71.nee the French Aeseral-Iy of Vre
?,??? appraTing, ,end. .:1plcraantini-:: the Pranao-175?etnn T1,1 rT1
PT ..VPrril 77c-;
?
f,:liznents..f.or dissident a-.7.7arlart orrani7atienn at result In tor;
ap:tiona.kistic.trand. -T1741 r-.1rIn.P.Pty proc par.doning ntarb-ars af
both -al Hukhlsap dissident avarien organitif3n of terrtral T2en,
its political affiliate, the JtforvilPeannlitnT Union (iir.7) ign,Tiln
President in the presence of !Ink loader, Luis T.a:.--tlee:11,--.:(-;ted
Le am/roved vrithout delay by the Maippine Congress v,./hich is our.rtly
.1a special session. The long-awaited annesty reportedly followed a crucial
meeting on 6 June in central Lusai at which Yak leaders and Government repre-
sentative Antonio uiririo., broth w of the President, threshed out the amnesty
terms and agreed upon the following points of policy: (1) encouragement of
Filip*O-owned industry; (2) a'more equitable land distribution to the peattantry;
and (5) J,mplementation of policies free from foreign influence and c carol
Tarue who recently admitted his membership in the Philippine Como:mist Thm:4.;y?
is an ardent nationalist and has repeatedly Protested against US privileges
and influence in the Philippines. It is likely that the luirino Administra-
tion, which by initiating the amnesty nogstiations haf:.,, already de-Ix-I:Asti
abruptly fratt the policy pursued by the late President Rotas, wii; carry out
the amnesty by a gradual trend toward the policy outlined at the 6 June meet-
ing. As a result the !TS may be faced with increasing- requests for changes
and interpretations of the treaties which define rather rigidly the rights
of the US and of !TS citizens in the Philippines,,
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