OFFICE OF REPORTS AND ESTIMATES, CIA FAR EAST/PACIFIC BRANCH INTELLIGENCE HIGHLIGHTS NO. 46 30 MARCH - 6 APRIL 1949

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000500020027-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 12, 2016
• Document Release Date: November 19, 2001
• Sequence Number: 27
• Content Type: PERRPT

Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020027-6
25X1A8A
25X1A6A
Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020027-6
Approver Release 2002/01/03 . CIA-RDP79-640A000500020027-6
amil@WIRMIPmmm.
COPT NO.
FAR EAST/PACIFIC BRANCH,
OFFICE OF REPORTS AND ESTIMATES
CENTRAL INTELLIGENCE AGENCY
WORKING PAM
NOTICE: This document is a working paper, NOT
an official CIA issuanoe, and has not necessarily
been coordinated with other ORE producing com,,
ponents. It represents current thinking by one
group of specialists in CIA., and is designed for
use by others enga red on 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 further dissemination.
COPY FOR3
Editor
200
Carr:DRIMase
-Appro tIA-RDP79-01090A000500020027-6
Approved F*Release 2002/01/
RET
-RDP79-010?34000500020027-6
OFFICE OF REPORTS AND ESTIMATES, CIA
PAR EASTAACIFIC BRANCH
INTELLIGENCE HIGHLIGHTS NO, 46
30,March.e-6-April 1949
SECTION Io SUMMARY OF FAR EAST -TRENDS AND DEVELOPMENTS
The Japanese Diet has established one committee to probe Communist
activitied but is holding off formation of another temporarily (p. 2).
The size of the armed forces in both northern and southern Korea is
on the increase (p. 2).
Chinese Nationalist delegates to the Peiping peace conference appear
to be both without a plan and without the support of all Nationalist
factions (p. 8). The Communists, meanwhile, apparently have been successfuljn adding some 600,000 ex-Nationalist troops to their armies (p. 4).
French military and civilian officials in Tonkin continue to be alarmed
by the worsening of their position in the northern Indochinese state (p. 8).
Despite a recent UK "gift" to Malaya, the costs of the anti-terrorist
campaign threaten to bankrupt the Pederation (p. 6).
Cabinet shifts in Burma which have eased the tension in Rangoon cannot
be expeoted to bring an end to present disorders (p. 7).
Dutch opposition to the garrisoning Of Jogjakarta with Republican
forces may prove to be the sticking point at the Batavia meeting (p. 8).
The minority Nacionalista party is exploiting its "balance of power"
position in the Philippine Senate at the expense of the Liberals (p. 8).
NOTE' A digest of recent reports on dissident activities in South
China appears in Section III.
----Tgrir-ai:ararircThations userin suootiaTrig5atrors-71=s7Warir--
("e, "B" or "C") indicate the importance of the items in RAE opinion
with "A" representing the most important.
mum
Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020027-6
Approved FUelease 2002/01/03 : CIA-RDP79-0109000500020027-6
SECTION 110 II. DEVELOPMENTS IN SPECIFIED AREAs
25X6A
cw_amgzOPtrooftjj I.sta_ter_.ea - It is increasingly evident that
scattered units previously under Chinese Communist command, 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 eix months. Integration of these experienced units into the still
untried People's Army will enhance its capabilities considerably.
UOXtQ consider troop_iathkgE41 - The United Nations Commission on
Korea UNCOK will establish a sub-committee to study the problem of troop
withdrawal, This results directly from the action by 63 members of the
National Assembly in petitioning UNCOK to secure withdrawal of occupation
troops from Korea. (See BAD Weekly #45) At present UNCOK has two sub-
committees, one to study the working of democracy in Korea and the other
Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020027-6
Approved korRelease 2002/01/03 : CIA-RDP79-01WA000500020027-6
SECUT
-3-
Agg4 (Cont.)
to plan a visit to northern Korea. Neither is empowered to consider
troop withdrawal, although that is one of the overall tasks given UNCOK
in its terms of reference by the General Assembly, US Representative
Mucci() has also suggested to UNCOK that it might be timely to consider
tne question of troop withdrawal. The Commission's probable recommenda-
tion for withdrawal of all occupation troops can be expected within the
next two months.
President nee, who in the past has opposed withdrawal of US troops
veLil his own security forces are adequate to defend the Republic, eee-
eely will not oppose such an UNCOK resolution openly. Instead, he will
iecrease his pressure on the US Government for additional arms and equipe
ment to continue the expansion of the Korean security forces.
Consistent with Rhee 0s present program of expansion, the Korean Arpy
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.
Except for mounts, the Korean Army cannot equips train or re-supply
a eavalry regiment unless the US makes available all the necessary ordi-
nance and equipment. Ftrthermore, 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 Negotiations -- 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 SHAO Li-tze apparently
favors peace on almost any terms, Chairman CHANG Chih-chung has told
US officials that he would not accept any settlement involving estab-
?
000000Wiles"'
Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020027-6
Approved F r elease 2002/01/03 : CIA-RDP79-010V000500020027-6
SMUT
lishment of one-party government, suppression of individual freedom,
or a strongly pro-Soviet policy. LIU Fei', Whampoa 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 Ting-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 Fe's chairmanship, members of the
Kuomintang Central Executive Committee and the Central Political Council
attopted conditions for an "honorable peace" which are incompatible
eith the Conmuniet demands, These Kuomintang leaders may attempt te
influence the negotiations and to reject tentative peace commitments by
asserting the traditional power of the Kuomintang over governmental
policies. Although CHIANG Kai-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
returned Nationalist soldiers indicates that the Chinese Communist-Party
(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 Chfna. The Conmunists 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 aeove 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 ---2
or 5 men to a Communist squad-- for use as assault troops and to
give the remainder--the majority--their choice of renaining 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 them.
Communists shift em hasizes cities -- The Central Committee of
the Chinese Communist Party (CCP), in plenary session last month for
the first time since 1945, endorsed the leadership of Chairman MAO
Tse-tung, 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
sugeested its belief that the USSR will assist the CCP in its primary
1111101.."...11111.1"4
Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020027-6
Approved FiNtielease 2002/01/03 : CIA-RDP79-01044000500020027-6
SECRE?
-6.
mission of developing industrial production.
Orthodox Marxism views the urban industrial proletariat as the
"carrier" of the socialist revolution. Chairman MAO, however, came to
power with the failure of LI Li-san'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 the proper time for its application; only now, this
year, has the period begun for transferring the leadership to the cities
for "working from the cities to the countryside."
The Central Committee also endorses.MA0Pa temporarily conciliatory
policy, as envisaged in the "New Democracy," rether than LI'a more
aggressive version of Marx-Leninism. Although it is proper to emphasize
the leading role of urban workers, the Party must "unite other laboring
masses..., the intelligentsia..., the petty and liberal. bourgeoisie,sos
and "democratic" personages outside the Party," in order to present a
common front against the immediate enemy, "the impsrialists,.Kuomintang
reactionaries, and bureaucratic capitalists." With 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 contributions
to the economy of Manchuria and Sinkiang. It is most unlikely that
the USSR will invest any significant amount of capital in China propers
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's 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 dilemma which confronted the early leaders
of the USSR--how to make the peasantry pay for a capital expansion from
which it derives no immediate benefits The CCP's solution?of large-
scale forced savings through rigid state control of agriculture?wtll
be less barbarous but no less painful.
Approved For Release 02/01/03 : CIA-RDP79-01090A000500020027-6
Approved Fokatlease 2002/01/03: CIA-RDP79-0109W00500020027-6
SECRET
INDOMINA
French reinforcements 'for Tonkin urea-- French officials in Tonkin,
bothielnriFy?a-1---irc-iatintinue their pessimistic outlook resulting
from the heavy military 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 III). Recent
reports state that cooperation between considerable forces of southern
Chinese bandits and the Viet ninh was followel by temporary French loss
of the strategic border town of 7onceee thus further endangering the
French position in Tonkin. The French are concerned over the possibility
of increasing Chinese assistance to the 0!.etnamese rebels, particularly
eeen South China falls under the dcaination of the Chinese Communiste,
Few French French officials believe that Bac, Dal's return will lessen re-
sistance by the Ho Chi T'inh forces. They insist that the former emperor's
return is deemed to failure without reinforcements from France to contain
the Viet rrinh troops within present limits? At the present time, it
appears quite unlikely that such aid rill be forthcoming in the amounta
necessary to improve the situation.
!SALM
Terrorist suppreesion costa mount-- Although British anti-terrorist
operaVraTrig een cress successful, the cost of the campaign
has become almost prohibitive. Security measures now cost the Federation
an estimated W150,000 daily. Thus, while the terrorists have not been
able to disrupt the country's eccnomy by lowering tin and rubber production
substantially, they have scored a victory from a different but equally
effective angle.
t1Bie
"A*
Sir Henry Gurney, High Commissioner of the Federation, recently stated
in a private conversation with US Consul General Langdon that the financial
position of the Federation is critical and that the scale of present police
operations must be reduced shortly if the Federation is not to go bankrupt,
This incipient insolvency was recently announced to Langdon by another
official, Dr? Frederick Benham, Eccnomic Adviser to Commissioner-General
MacDonald, The depth of this pessimism may be too great, but the responsible
positions of the British spokesmen as well as the ccntinning seriousness
of the terrorist situation lend credence to their views.
Last week the UK announced a gift, with no strings attached, of
L5,000,000 as aid in financing lalaya's internal security, over and above
present military aid, lhile not inconsiderable, this sum was not received
with unanimous approval by the Federation's Legislative Couneillors.,
Dato Onn, influential Prime Tinister of Johore, characterized it as
Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020027-6
Approvedfiet Release 2002/01/03 : CIA-RDP79-011106000500020027-6
.111111111114111
MALAYA (continued) -7-
"niggardly" and "..,a flea bite in comparison with what the Malay States
and Malaya as a whole had done for Britain." He urged the High Commissioner
to make further representations to Britain to "honor a debt" which, he
said, had accumulated since the British entry into Malaya. Several other
members expressed disappointment that the gift was not larger.
mnless conditions improve substantially, the Federation will undoubted-
ly have to take advantage of Britain's offer, advanced along with the gift,
to reexamine the Federation's needs before the end of this year. Costs
are mounting and, according to Langdon, hope of early extermination of
eee terrorists is vanishing. To a hard-pressed Britain, appreciati,ea of
eeeaya's dollar-eerning capacity., further aid to Malaya will be a severe
but probably inescapable burden.
BM%
Government shaken will not ease Karen obleme-The recent resigna-
tion o ocia at and ow Arm. Ba Peop es' Volunteer Organization
(PV') members from the Burmese Cabinet has left Prime Minister Thakin Nu
with a skeleton cabinet composed of independent politicians with little
or no nersonal following. Although the widespread armed opposition to
the government was nrcibably the leading factor behind the cabinet resig-
nations, it is possible that there were other important though lees
apnarent reasons. In view of the fact that the resigning "inisters pledged
their suneeet to any Government committed to the restoration of peace,
stability of tLe Triton and the holding of free elections, their purpose
may have been to allow Thakin Mu, supported by a cabinet whose members
apnear to have no personal nolitical connections, to attempt to reach an
agreement with the insurgent Karens and lhite Armed Band ?In. In line
with this reasoning, Nu 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 Maung and
Supreme Commander Me lin, both believed to be acceptable to the Ihite
Armed Band PVO1 will relieve Nu of the Home and Defense portfolios
respectively; This move may be a parallel attempt to placate the in-
surgent PVOs.
The Karens 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 PTO is apparently undecided as to whether
to enter a coalition under Md? or attempt to seize complete control of
the government. Most of them Will not condone negotiations with the Karens,
or cooperation with The:kin Mu unless they are in a position to dominate
Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020027-6
Approved For Wase 2002 /03 : CIA-RDP79-01090A15110500020027-6
reIRWk (continued)
the coalition. Should some min leaders join a coalition, it is quite
likely that the PV0 will salt.' If the WO attempts to unseat the
ecvernment by force, the result will be violence in Rangoon and the
outcome is unpredictable, There are indications that the PM 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.
TTIDTFSTA
Control of Jogirta key Issue at Batavia mostint-Conditional
aeeeptance by the Netherlands o an inTratTO-riTO?atrend the UNCFT-
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 "freedom and order in Indonesia,"
and the Republicans 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 sides are
particularly concerned with the role of the Republican Army in maintaining
law and order in the Republican capital, Dutch rolitical leaders have
consistently opnosed the use by the Republicans of their "private" army,
as opnosed to a "federal" army, in any area in Indonesia, 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 rs Representative to the TIN Committee for. Indonesia, recommends:
(1) Dutch forces be withdrawn from Jogjakarta and its environs and (2)
that a sufficiently large Republican force be permitted to replace these
Dutch military units. He feels that only thus will the Republicans be in
a eosition to reestablish the nopular support necessary for successful
compliance with a cease-fire order.
PHILTPPITES
RBA
Nacionalistes hold Senate balance of power?Although President quirinoos
political position apnears to be improving, he is threatened by a force
which is paradoxically one of the most important sources of his strength:
Quirino is completely dependent upon the Nacionalista-euirinista alliance
in the Senate. Aware of their "balance of power" strength, the Nacionalistas
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
Approved For Release 20 /01/03 : CIA-RDP79-01090A000500020027-6
Wefil
Approved Fokiltlease 2002/01/03 : P79-010964400500020027-6
CRET
PHILIPPINES (continued)
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 quirino win over
a sufficient number of Avelino followers or should a compromise be
effected between the Liberal factions, Quirino could end his dependence
unon the NaciOnalistas. However, since neither of these possibilities
is imminent, the Nacionalistas may be expected to maintain their im-
nortant bargaining'poeition for the remainder of the current Con-
gressional session.
Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020027-6