FAR EAST/PACIFIC DIVISION OFFICE OF REPORTS AND ESTIMATES CENTRAL INTELLIGENCE AGENCY WORKING PAPER WEEKLY INTELLIGENCE HIGHLIGHTS NO. 74

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000500030008-6
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 9, 2016
• Document Release Date: January 26, 1999
• Sequence Number: 8
• Publication Date: November 1, 1949
• Content Type: PERRPT

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FAR EAST/PACIFIC DIVISION
OFFICE OF REPORTS J\ND ESTIMATES
CENTRAL INTELLIG.. CE AGENCY
e~ORK7~NG PAPER
aEEKLY INm1;LLIG .:a3CE IUGfBLIGHTS
NO. 74
DATE:_ 1 November 1949
NOTICE: This document is a working paper, not an official CIA
document. It has been co-ordinated within ORE, but
not with the IAC Agencies. It represents current
thinking by specialists in CIA, and is designed studies.
use by others engaged in similar or overlapping dies.
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.
14 A /I/ U
CL.A;,,. CrIr1iJ?;,~ TS
NEXT REVIEW DATE:
AUTR:
DAt/G- --~ Tff-g VIEWER 372
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OFFICE OF REPORTS AND ESTIMATES, CL 11
FAR EAST/PAC:IFIC DIVISION
IP4TU LIGMCE HIGHLIUhTS NO. 74
26 OCTOBER to I NOVEMBER 1949
Fa.ilin all other alternatives, Wationalist General PAI
Chung-h. i, may attempt to evacuate his forces into Indochina --
an action which could have the most severe repercussions on the
French position there (p. 2).
Communist guerrillas in the Republic of Korea have been
active in recent weeks despite large-scale Ar y cc untenneasures.
A recent successful, rice raid may indicate guerilla plans for a
winter offensive (p. 3).
President Quirino is apparently assured of reelection next
week, although his mar.-In of victory will be slim. Violence can
be expected both at the polls and in the three , -zeeks required to
count the vote (p. 4).
(NOTE: Section III contains a surruuary discussion of the
formation and structure of the "Central People's
Government of the i eople's Republic of China", in
continuation of the study which discussed the PRC
State Administration Council in last week's Issue.)
The marginal notations used in succeeding sections of this Weekly
("A" and ''C") indicate the importance of the items in DI FE
opinion with "A" representing the most important.
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SRAION II. D.EVE~L0PLU T5 IN SPECIFIED AREAS
GENERAL
Chinese Nationals is May flee to Indochina--There -`fhere have been recent
indications that the last sizeable organized Nationalist force - softie
90,000 troops under PAI Chung-hsi - may attempt a withdrawal into
Indochina in order to avoid annnihilation, should no adequate formula
for surrender to the encircling Communist armies be found. Althouu,-6't
PAI may capitulate or abandon his armies and seek refuge abroad rn ~r
than. flee China with his troops, he must for the present keep his
force intact, since it represents his only worthwhile bargaining
point with the Communists.
Having suffered badly in the retreat from Hunan, PAl is being
maneuvered into a withdrawal towards the Nanning area of southern
Kwangsii, near the Indochinese border. Since he probably cannot hold
a front in that region, he is faced with the alternatives of retreat
further irdest to Yunnan, an amphibious withdrawal to Hainan Island or
the crossing, of the Indochinese frontier. PAI; is unlikely to be wel-
coined in Yunnan and the irnoending loss of the coastal ports necessary
to a Hainan withdrawal leaves him - should he chose to remain with his
troops - with a choice of surrender or retreat to Indochina. PAI?s
associates have been reported to be actively exploring this latter
alternative.
Should PAl enter Indochina, it is unlikely that. he will find
friends. The Vietnamese resistance leader, Ho Chi Minh, has strongly
indicated that PPAI ss forces would not be welcome, despite the apparel-it
advantages that would derive from the resultant trouble and confusion.
The French, in turn, realize that PAI$s presence - at their "invita-
tion" or otherwise - would be extremely damaging to their cause. French
approval of the Trove would allow the resistance to play upon tradition-
al Vietnamese hostility towards the Chinese: French rejection, would
demand the use of force in the very area where the French military
position a..: the most critical or, alteinGatively, a staggering loss of
face, should PAl enter unopposed despite French protests.
Borst of all from the French viewpoint is the fact that .PAI's
entry would provide the pursuing Chinese Communist forces with a ready--
made excuse for "punitive" entry into Indochina themselves. The pro
Coamunists among IHo Chi e:inh's followers could be expected to "welcome"
such "liberating" Chinese forces, come to drive out the "oppressing"
PA L Direct materiel support of the Vietnamese resistance by the Chinese
Communists, furthermore, would almost certainly assure the expulsion of
the French from i'dorth Vietnam, if not from all of Indochina.
~A
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Ng~43 NOTE,
tst2E2.ina 4sia makes ;ia;.ayan ore Ja,)ants best u__Devaluaation of the
pound has dropped the price of t.a eyan iron sire to a level at which
Philippine mines, chief suppliers to Japan, cannot compete at present.
For the year 1950,, Malaya apparently can supply some 800,000 tons of
iron ore to Japan.
SCAP estimates that Japan will need to import 1,800,000 tons of
iron ore durir4; 1950. China had been contemplated as a source of a
substantial part of the Japanese requirement.. In view of the uncer-
tainty that Chinese ore will be available, however, Japan probably will
welcome an anticipated 800,OO0 tons of Philippine ore, regardless of
price
KOREA
Increased errill~a activit' -_In the strongest raid of recent `runs
300 Communist guerrillas awned with carbines and light machine
attacked Ohtnju, near the southern coast of Korea - a city of approxi-
mately 90,000 and headquarters of the Aorean Var m e Corps - early ixi
the morning of 2;' October. Before being driven out of the city, the
guerrillas destroyed a Marine barrack and buildings in the city and
vaptured 6,000 sacks of rice, 388 pairs of combat boots, and. a few
t'ieaporls.
Guerrilla units ranging in strength from 50 to 300 men have con-
tinued to operate against sr. .l towns, villages, and communication
lines during 3epteaiber and October, despite the "fall offensive" of
three Korean Army Task Force units. Apparently guerrilla losses are
being balanced in part by forced recruiting in southern Korean villages
g
and in part by a constant influx of guerrilla school raduates from
the northern puppet republic.
The primary purpose of the raid, on Chinju appears to have been
the seizure of rice supplies for guerrillas operating from the nearby
Ctiiri mountain area -- an action which tends to substantiate recent re-
ports that the guerrillas have received instructions ffrom roulthecsnorth
to mount a "winter offensive. V Traditionally, the
tainin g food and living in the mountains during the winter has forced
the uerril,las in Korea to stay under cover and refrain from major
operations Burin: ain`er months. It now appears possible, however,
; at northern Korean strategy dictates sustained guerrilla operat:1ons
durin_: the coming ,Tinter months so a to force a continued diversion
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of southern Korean kxmy troops to duty away from